Theatre 80 St. Marks is gearing up for its final act.
Almost two years after Maverick Real Estate Partners initiated a foreclosure on the former speakeasy — which in recent years housed a bar, apartments, an off-Broadway theater and the Museum of the American Gangster — a bankruptcy auction has been set for May 9.
This particular foreclosure is unlike most initiated by Maverick across the city: The property, at 78-80 St. Mark’s Place, doubled as the home of owners Lorcan and Genie Otway, who lived in a unit above the theater.
After being evicted, Lorcan says they are homeless. The couple are temporarily residing at the home of Father Pat Moloney, a 91-year old activist who for decades has run a shelter for troubled youths out of his East Village brownstone and once served four years in prison in connection with the 1993 heist of a Brinks depot in Rochester. (Moloney has maintained his innocence).
Now Otway is living with a priest and searching for a hail mary. He’s asking the city to buy the loan held by Maverick, take over the property and then provide a new loan to a nonprofit he runs. It’s a long shot to say the least. Most likely, the theater will be sold at auction to Maverick, which has the right to bid using its existing debt on the property.
Manhattan-based Maverick, led by David Aviram and Ted Martell, has become one of the most aggressive buyers of distressed debt in New York, buying up troubled loans held by both small and large landlords — including moguls like Joe Chetrit and Joe Sitt — and frequently getting into legal battles along the way.
Maverick’s approach typically involves coming in when a borrower is already in trouble.
In this case, Lorcan Otway was entangled in a bizarre dispute with his brother, Thomas, who claimed in 2015 that Lorcan — then 60 — had threatened to become a war correspondent in Afghanistan if their late mother chose to sell the property rather than granting him the deed, according to DNAInfo. Lorcan denied the allegations.
The dispute forced Lorcan Otway to take on a one-year, $6.1 million loan from alternative lender, Hirshmark Capital, which he personally guaranteed.
The short-term debt proved disastrous when Covid hit and forced the city’s theaters to close. Maverick swooped in and bought the loan in late 2020, raising interest to a default rate of 24 percent, just under the state’s legal limit.
“They [Maverick] are a predatory firm which profiteered on a worldwide health emergency,” Otway said.
Otway was initially able to negotiate some forbearance with Maverick and a chance to refinance, but under harsh terms: he was required to pay the principal and accrued interest on the loan in less than four months. If not, the property had to be listed for sale starting at $11 million, decreasing each month to a final price of $8.5 million. If the property was not sold by August 15, 2021, Maverick would foreclose.
When listed, the property only received one offer of $9.3 million, according to Maverick’s court filings. The broker said the debtor, Otway, never responded to the offer and asked to take the property off the market in August 2021.
Maverick initiated a Uniform Commercial Code foreclosure on the debtor’s equity stake that fall, giving it a clear path to possession.
Otway briefly paused the process by filing a lawsuit in New York state court, which was dropped when the parties agreed to a one-month delay on the foreclosure. It allowed Otway one last chance to refinance the debt, but he was unable to.
A bankruptcy trustee appointed to oversee the property sought to convert the case to Chapter 7 bankruptcy in June of last year, turning it into a liquidation.
“The debtor’s business does not generate sufficient income to meet its current or projected operational expenses,” the trustee said in a court filing.
The trustee filed a separate lawsuit against Lorcan and Genie Otway, claiming that they entered into invalid leases while under forbearance, including one with themselves as tenants. The trustee also claimed the Otways failed to vacate and surrender the premises as required.
Ultimately, the Chapter 7 trustee filed a motion to sell the property.
The auction will be hosted by Maltz Auctions and will require bidders to provide the trustee with a $950,000 cashier’s check upfront.
Otway said outside of a heroic action by Mayor Eric Adams, he can only hope for a white knight to swoop in to save the theater. He said the IRS recently fast-tracked a petition to grant the theater tax-exempt status and that one anonymous donor has already pledged $3 million. But the owners will still need millions more.
“We are reduced to begging,” said Otway.
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