Brooklyn developer Shelly Listokin wants to buy the $100-plus million in loans attached to the troubled tower at 161 Maiden Lane — just not yet.
An entity tied to Listokin that agreed to buy the South Street Seaport loans in July filed for chapter 11 bankruptcy Thursday so it would not be forced to close on the purchase.
URP Maiden Lane LLC alleges that Valley Bank, which holds a majority of the $120 million loans issued for the unfinished condominium, may have hurt the buyer’s bargaining power by disclosing certain information during mediation proceedings between Fortis Property Group and the bank.
The project, which Fortis is developing, is tied up in lawsuits, including one over mistakes that led to the tower leaning a few inches to the north. Work has stalled on the 80-unit tower since last year and Valley is fighting to foreclose on its loans.
Fortis has filed a separate lawsuit against the bank, arguing that the lender violated their loan agreement. The parties recently agreed to re-enter mediation, but those conversations may have complicated the loan deal.
In October 2020 Newmark began marketing the loans, which were originated by Bank Leumi USA. Valley acquired the bank in April 2022. A general partnership led by Harel Insurance holds 25 percent of the loans.
A lawsuit filed this week by Listokin’s LLC claims that it agreed to buy the loans in July, but that during mediation Valley misrepresented Listokin’s plans to foreclose.
Valley allegedly told Fortis that Listokin was taking over the loans “without recourse” and would quickly settle the foreclosure action and finish the project. The lawsuit claims that the bank implied that the Listokin entity would take on “uncapped liability.”
An attorney for Valley, according to the lawsuit, also stated that Listokin intended to complete the project. The lawsuit further alleges that the bank misrepresented that Listokin’s Urban Realty Partners is the would-be loan buyer, when it is in fact a separate entity: URP Maiden Lane LLC.
This disclosure, according to the complaint, gives the impression “that there is a substantial reservoir of monies for settlement” and potentially hurts URP Maiden Lane’s position in negotiations with Fortis and other parties.
Attorneys for Valley and Listokin declined to comment. Listokin could not immediately be reached.
PincusCo first reported the lawsuit. The complaint was withdrawn Thursday after URP Maiden Lane filed for bankruptcy protection.
The loan deal was supposed to close on Thursday. URP Maiden Lane intends to move forward with the purchase “provided it has ample opportunity to assess what was said and what the impact those statements may have on the financial viability of the contemplated transaction,” according to its lawsuit.
If it buys the senior debt, Listoken’s LLC would seek to negotiate deals with Fortis and junior creditors.
URP Maiden Lane filed for Chapter 11 to delay the closing for at least 60 days. The bankruptcy filing lists $96 million in assets, including a $6 million deposit paid as part of the purchase agreement and the $90 million that has been paid out on the construction loan.
It was not immediately clear what Listokin plans for the site or if he would work with Fortis to complete the project. He has previously partnered with the company.
The fight over the loans adds to the legal disputes clouding the project’s future. Fortis and its previous construction contractor Pizzarotti blame each other for the tower’s tilting, and several construction companies are waiting to be paid.
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