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The lender who backed the Williamsburg Hotel’s previous owners say it is still owed nearly $30M after the bankruptcy sale of the Brooklyn property, and it wants the court to force the borrowers to pay up.
Benefit Street Partners loaned $68M to Tony Moskovits’ and Michael Lichtenstein’s company, Heritage Equity Partners, in 2017 with the hotel as collateral. The loan agreement came with a continuing guaranty of recourse obligations, also known as a “bad boy guaranty," which meant that the bankruptcy triggered a default in the loan, making it a full recourse loan guaranteed by Moskovits and Lichtenstein, BSP argued in a motion for summary judgment.
The lender filed the motion in New York State Supreme Court, asking a judge to immediately compel Moskovits and Lichtenstein to pay more than $29M, arguing the guaranty, which is included as an exhibit in the filing, precludes the need for a full-blown legal complaint.
“New York real estate and legal circles have since come to recognize Moskovits and Lichtenstein as grifters,” the motion reads. “The Court need not plumb the depths of Moskovits’s and Lichtenstein’s financial depravities here. This is as straightforward a motion for summary judgment in lieu of complaint as can be.”
This filing is the latest in a protracted, years-long foreclosure dispute over the property that appeared to conclude in the hotel’s sale last month. Hotel developer Quadrum Global paid $97M for the 147-room hotel, after a bankruptcy trustee selected the UK-based firm as the buyer in January.
BSP received net proceeds of $88M from the sale, it said in court filings, but Moskovits and Lichtensteins' total debt — covering costs, an exit fee, a 5% late fee on all overdue and unpaid funds, loan interest and default interest 5% above the agreed rate —amounted to $117M as of last month.
The principal, at $68M, remains unpaid, and BSP wrote in its filing last week that, apart from the money from the sale, “not one penny” has been paid back. BSP's attorneys for the plaintiff didn't respond to a request for comment. Moskovits didn't respond to a request for comment.
Moskovits and Lichtenstein first defaulted on the loan in 2019, when BSP sued to foreclose on the property.
While a judge initially denied BSP's action, an appeals court in 2021 reversed that decision, granted a summary judgment in BSP's favor and dismissed the borrowers' defenses and counterclaims.
Within days, BSP argued, Lichtenstein and Moskovits filed for bankruptcy. In the final ruling last year, a Westchester County bankruptcy judge found that Moskovits and Lichtenstein’s actions had risen “to the level of fraud” and that they had displayed “willful failures to disclose and appropriation of assets.”
While the borrowers denied accusations from BSP that they had taken money out of the hotel, an independent investigation found some $12.5M had been delivered into companies controlled by Moskovits and Lichtenstein.
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