Just two months ago, a federal bankruptcy judge stripped Toby Moskovitz and Michael Lichtenstein of control of the Williamsburg Hotel, saying they could not trust its finances.
The bankruptcy trustee is currently seeking to appoint Eastdil Secured and A&G Real Estate Partners as brokers for the sale of the property.
The two will co-broker the sale for a commission of 1.25% of the initial total sale price of $103.4 million. They will receive an additional 3% on amounts over $103.4 million. If real estate lender Benefit Street Partners wins the auction with her $96 million or less credit bid, the broker will only receive her 50% of the commission.
Lichtenstein and Moskovitz have not yet contested the motion to appoint brokers.
However, they dispute another proposal. Trustee Stephen Gray seeks to terminate his two management contracts between the Moskovitz hotel management company and Liechtenstein.
Gray said he doesn’t need an agreement because he’s in charge of real estate. He is asking the judge to reject the management contract retroactively to the date the trustee was appointed.
“The management contract does not benefit the debtor’s property,” his filing said.
Management contracts were an important part of bankruptcy proceedings. An independent examiner commissioned by the court said the funds were entangled between the debtors and the hotel’s management company, both controlled by Moskovitz and Lichtenstein.
“The principal controls both sides of the accounting ledger, prevents open disclosure of financial and accounting transactions, and enables the siphoning of funds (from the debtor and through the manager) into unrelated investments of the principal and possibly other transferees. did,” the report said. said.
Moskovits and Lichtensten technically still own the hotel, even though they do not control the hotel’s operations. The developer recently challenged the trustee’s refusal of the management contract, arguing that some vendors may not be paid.
“Rejecting a management contract without notifying the numerous counterparties to the contract with the manager creates uncertainty about who is responsible for payment and when the vendor can expect payment,” their objections state. increase.
Another problem is the trademark of the Williamsburg Hotel. Lawyers for Liechtenstein and Moskovitz claim that the trademark, along with the hotel’s slogan, “Sleep With a Local,” are owned by Moskovitz. According to Moskovits and Lichtenstein, the trademark can no longer be used if the trustee rejects the management contract.
But the trustee essentially calls the claims nonsense. He also alleges that Liechtenstein and Moskovitz have recently interfered in the hotel’s operations, including its online reservation system.
The trustee says the hotel is performing well under his management, generating more than $1 million in net operating income in its first month.
Moskovits and Lichtenstein’s Heritage Equity Partners were key developers in the transformation of the Williamsburg and Bushwick area from an artist’s haven to a yuppie playground.but the legacy I’m in trouble With creditors before the pandemic. Some assets were forced into bankruptcy to stop them from being seized by lenders.
a Westchester County Bankruptcy Judge He appointed the Chapter 11 Trustee and warned Lichtenstein not to dig himself into a deep hole.
“Mr. Lichtenstein did not make a good impression,” the judge said at the time. it’s finished.”
judge dominate Moskovits and Lichtenstein appeared to have put an end to the legal carnage between developers and Benefit Street, who claimed they had diverted money from the business. Benefit Street sought a foreclosure on the hotel, and Moskovitz and Lichtenstein filed for bankruptcy last year.