Facing foreclosure, the owner of a near-construction hotel in downtown Brooklyn has resorted to bankruptcy to pay off the project’s mounting debt.
An entity controlled by Brooklyn developer Abraham Leifer filed for bankruptcy, paving the way for the sale of 291 Livingston Street, a 21-story hotel project known for the distinctive zebra-like mural that covers much of its exterior.
According to the bankruptcy filing, the project is 95 percent complete but needs an additional $6 million to complete.
It is one of a growing number of properties across the city that are turning to bankruptcy court to delay foreclosure or otherwise fend off distress. In this case, the debtor’s restructuring officer, David Goldwasser, said the developer simply ran out of cash.
“In order to maximize the value of the property and reduce ongoing accruals and costs associated with title and management,” the filing reads, “the debtor will attempt to sell the property in its Chapter 11 case to generate proceeds to repay its creditor.”
Insolvency expert Greg Corbin is marketing the auction.
The hotel’s history dates back to 2016, when Leifer’s Aview Equities was quietly putting together a 220,000-square-foot office and retail project in downtown Brooklyn. That never happened, but Brooklyn-based developer Eli Karp’s Hello Living bought the Livingston Street site for $11.1 million in 2017, with Leifer remaining an investor.
Later that year, Karp floated plans to build a hotel there, but in 2018, Leifer replaced him as a managing member of the hotel-ownership group.
As construction progressed on Gene Kaufman’s designs, the project soon began to encounter problems with lenders and subcontractors.
Late last year, lender Acres Capital sued UCC for foreclosure, alleging that the hotel’s ownership group defaulted on a $29.7 million mortgage. Then, in March of this year, a mezzanine lender sued the property owners, claiming they had failed to repay their loans despite reaching a settlement that extended the due date.
Nearly 20 mechanics also filed a lien on the property totaling about $3 million, according to the bankruptcy filing, though the owner contested those liens.
The owners value the property at approximately $29 million.
Leifer’s Aview Equities in Borough Park is also facing trouble with its nine-story residential remodel at 19 West 55th Street in midtown Manhattan, with lender China Merchants Bank recently alleging it defaulted on a $36.7 million refinancing loan.
pincus first Report Livingston Street Bankruptcy.
