Helaba Exits Foreclosure Lawsuit Against Jeff Sutton’s Herald Square Retail Property

A German bank has quietly exited foreclosure litigation it initiated last year against Jeff Sutton’s Herald Square retail property at 29 West 34th Street.

The bank, Helaba, assigned the $50 million mortgage package to a new corporate entity, 29 W. 34th Street Holdings LLC, according to court records filed on July 17, which immediately reassigned the debt to 29 W. 34th Street Lender LLC.

Financial documents show that SL Green’s Chief Legal Officer Andrew S. Levine is acting as executive vice president of 29 W. 34th Street Holdings LLC. Sutton, New York’s “King of Retail” worth an estimated $2.7 billion, according to Forbes, originally acquired the property in a joint venture with SL Green in 2006 and bought out the partner’s stake a few years later.

Helaba declined to comment on the latest developments in the case. Sutton, his attorneys, and Levine did not return requests for comment by press time.

Sources close to Sutton believe Helaba’s exit could signal a settlement.

Helaba originated the $50 million mortgage to 29 West 34th Owner LLC, an entity controlled by Sutton, in 2018. After issuing formal notices of default over unpaid real estate taxes in early 2025, the lender filed a foreclosure action that September. Sutton, who allegedly signed a limited guarantee on the loan, was named as a defendant. The court later appointed Ian Lagowitz as receiver.

Sutton’s lawyers, Darren and Terrence Oved of Oved & Oved, fiercely pushed back against the claims, arguing the lender’s move was a “transparent, orchestrated attempt to tarnish” the retail mogul’s reputation. They filed a motion to dismiss the foreclosure action. Sutton’s limited personal guarantee, the lawyers argued, would only make him liable in instances of fraud or other intentional misrepresentations.

Helaba claimed Sutton’s unpaid tax bill put him in default. But by Sutton’s account, the property’s value was decimated by Covid, with two of the property’s prior tenants, Geox and Aldo, entering bankruptcy. Sutton’s legal filings also took aim at the city’s Department of Finance for assessing real estate taxes on the property as though it were bringing in $6.6 million in gross rental income. In actuality, he claimed, the rent was about 10 percent of the city’s total, at $680,000, and the property has not received rents anywhere close to the city’s number over the last six years.

A recent escalation

The potential settlement comes amid another legal case against the head of Wharton Properties.

Lagowitz, acting on behalf of 29 West 34th Street Owner LLC, sued Sutton personally in January, seeking to recoup $12.2 million in unpaid real estate taxes.

Sutton’s attorneys responded with a motion to dismiss the lawsuit in March, arguing that Lagowitz’s claims “exceed the scope and purpose of his appointment, which is to preserve the Property, not to unravel the very arrangement that protects it from a forced sale.” According to the filing, monthly installments were “being made timely” and Lagowitz’s allegations of damages “are wholly speculative and conclusory”.

In May, Lagowitz escalated his lawsuit, accusing Sutton of engaging in bad faith and self-dealing by transferring his personal multi-million dollar tax debt to his corporate entity.

Under the building’s lease terms, Sutton — acting as a tenant — personally owed $12.2 million in real estate taxes to the New York City Department of Finance as of Oct. 20, according to the lawsuit. But after 29 West 34th Owner LLC entered into a 10-year payment plan with the city, Lagowitz alleges that obligation was shifted from Sutton to the borrowing entity.

Lagowitz further alleged that entering the payment plan increased the total tax debt to $21.6 million, because it requires 120 monthly installments of $180,286 each.

“Thus, to avoid his personal liability for unpaid real estate taxes, Sutton, without any valid business justification, wrongfully caused the borrower [his entity] to agree to incur real estate tax liability for over $9 million more than the amount that Sutton owed,” the lawsuit alleges.

Lagowitz also argued that if Sutton keeps failing to pay and the property is ultimately sold in foreclosure, the New York City Department of Finance would get paid ahead of Helaba’s mortgage claim, reducing the lender’s recovery.

The lawsuit also alleges Sutton failed to pay $2.9 million in rent between August 2025 and April 2026, causing the lease to default in April. The retail space currently sits empty.

Sutton’s attorneys responded with another motion to dismiss the complaint in June. Initiating this lawsuit, they claimed, “falls outside the scope of the [Lagowitz’s] appointing order.” The lawyers also argued that by entering the tax plan with New York City Sutton exercised “the business judgment rule,” which insulates him from “judicial second-guessing.” Again, they emphasized that the head of Wharton Properties pays monthly installments on time.

Lagowitz and his attorneys did not return a request for comment.

Whether or not the 34th Street saga is nearing a resolution, Sutton continues to face headwinds elsewhere. An entity tied to Sutton’s Wharton Properties, which controls the basement and first three floors at 599 Broadway, stopped making rent payments late last year. The property is grappling with an 80 percent valuation collapse to $32 million and a pending foreclosure suit on its $75 million CMBS loan.