Moskovits and Lichtenstein lose stake in Williamsburg apartments

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Left to right: Ron Friedman of Hutton Capital, Allan Lebovits of BridgeCity, Toby Moskovits and Michael Lichtenstein of Heritage Partners with 225-227 Grand Street in Brooklyn (Getty, Google Maps, Hutton Capital, BridgeCity, Heritage Partners)

Left to right: Ron Friedman of Hutton Capital, Allan Lebovits of BridgeCity, Toby Moskovits and Michael Lichtenstein of Heritage Partners with 225-227 Grand Street in Brooklyn (Getty, Google Maps, Hutton Capital, BridgeCity, Heritage Partners)

The apartment and retail building at 225-227 Grand Street in Williamsburg cemented Toby Moskovits’ rise as a Brooklyn developer. Now, this could represent his downfall.

The 41-unit property was sold in a bankruptcy auction to the sole bidder: its mezzanine lender, an entity that includes Ron Friedman of Hutton Capital, Aaron Jungreis of Rosewood Realty and Allan Lebovits of BridgeCity Capital.

It’s the latest sign of trouble for Moskovits and his business partner Michael Lichtenstein, who lost control of the nearby Williamsburg Hotel to a trustee in June in a separate bankruptcy.

The 227 Grand Street saga involves some of Brooklyn’s biggest real estate players.

A decade ago, the Moskovits firm tapped prolific architect Karl Fisher to design the building, whose oversized black windows, red brick facade and expansive roof symbolized Williamsburg’s cool industrial aesthetic in a time when the neighborhood was still evolving into a haven for the affluent. make millennia.

In 2011, Moskovits approached up-and-coming Brooklyn landlord Yoel Goldman to invest in the project, which was then under construction. Goldman paid $2.5 million in exchange for a 35.25% stake. The rest would be split between Moskovits, who would own 5%; Lichtenstein, which held a 26.75% stake; and real estate investor Moshe Schweid, who owned the remaining third.

But the relationship between Goldman and Moskovits would soon implode.

After a series of lawsuits, Goldman and Moskovits agreed in 2015 to part ways and divest themselves of a handful of properties they jointly owned, but Goldman retained his stake in the Grand Street building and his company, All Year Management, continued to manage it.

The deal did little to solve their problems.

A year later, the partners were back in court when Goldman’s development company, All Year Holdings, sued Moskovits and Lichtenstein, claiming they were trying to oust him from the project. Meanwhile, Moskovits, Lichtenstein and Schweid then sued Goldman in 2017, accusing him of stealing company funds.

In 2019, the senior loan was coming due and the mezzanine lender requested foreclosure of the equity interest in the property.

Moskovits and Lichtenstein responded with a tactic familiar among Brooklyn homeowners seeking to avoid foreclosure: They hired bankruptcy specialist David Goldwasser to take the case to Robert Drain, a retired federal bankruptcy judge from White Plains. , New York, with a reputation for being debtor friendly (which Drain strongly denied).

At the time of filing, Lichtenstein said TRD, the application for bankruptcy would be withdrawn soon. It was not.

The bankruptcy proceedings lasted three more years. Meanwhile, Goldman sued Lichtenstein and Schweid once again in 2020 for trying to get him off the property. Lichtenstein and Schweid hit back, saying Goldman colluded with others to force the senior mortgage, which was purchased by Madison Realty Capital, into default.

At the end of 2021, it appeared that Goldman’s All Year Holdings had again reached a compromise with Moskovits and Lichtenstein. All Year would sell its stake in the property for $4.5 million. The hotel would be refinanced and come out of bankruptcy.

But the case fell apart. All Year later claimed that Moskovits and Lichtenstein’s company never made the required payments.

Eventually, the mezzanine lender grew weary of the lack of progress in the bankruptcy case. In April, he filed for conversion of the case into Chapter 7 bankruptcy, under which a court-appointed trustee would liquidate the property. The mezzanine lender argued that the debtors failed to file timely operating reports and would not be able to repay their creditors, which included another mezzanine lender also linked to Ron Friedman of Hutton Capital.

Settlement negotiations continued throughout the spring, but there was one major sticking point: All Year Holdings had not signed an updated settlement agreement. It turned out to be a difficult task. Goldman, which faced its own series of defaults, was kicked out of All Year and replaced by restructuring agents, who bankrupted the company in the United States and the British Virgin Islands.

During a hearing on June 8, Judge Drain questioned whether All Year needed to sign the deal since he had already signed a previous deal.

” That does not make sense. There is already an agreement. He might as well say, you know, I want Pete Alonso to sign him,” Drain said, referring to the New York Mets first baseman.

At the hearing, the debtors said distressed New York lender SME Capital would provide them with exit financing. But fast forward three weeks, just days before Drain retired from the bench, and SME was out.

“Unfortunately, following the recent credit market contractions, we discovered on Friday that our exit finance lender had lost funding,” the debtor’s attorney told a hearing.

Without financing, the property went to auction late last month. The mezzanine lender was the only bidder, putting down $41.5 million, using existing debt and new cash.

To fund the cash portion, the Hutton Capital-led group secured a $27 million loan from Cross River Bank, based in Teaneck, New Jersey. The loan document was signed by Rosewood Reatly’s Aaron Jungreis and Brooklyn investor Allan Lebovits in addition to Friedman, according to court documents.

The money will be used to repay creditors, including senior lender Madison Realty, as well as All Year Holdings, Goldwasser, the bankruptcy trustee and attorneys. Notably, the Ackerman law firm, which represented the debtor, will receive $500,000, according to a Goldwasser filing.

Moskovits did not return a request for comment, nor did the debtor’s attorney. Hutton Capital also did not return a request for comment.

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