The grueling three-year battle between Brooklyn landlord Chaskiel Strulovitch and lender Maverick Real Estate Partners is coming to an end.
After putting 31 of his Brooklyn apartment buildings into Chapter 11 bankruptcy in 2019 to fight off an attempted foreclosure by Maverick, Strulovitch managed to save most of the properties earlier this year with bailout funding. expensive Maguire Capital from Marvin Azark, a New York-based lender. .
Now Maguire, not Maverick, is expected to take control of the majority of Strulovitch’s remaining portfolio, according to court documents.
Maguire recently won an auction for six of the properties. Investors Joel Wertzberger and Josef Mikkelson purchased the other three separately. The winning bids for the nine properties totaled $19.6 million, including brokerage fees and approximately $350,000 in break fees paid to bidder FREO Group.
The sales mark the end of a long and brutal bidding process that received more than 150 rounds of bidding, lasted more than two days and was subject to objections from Maverick’s lawyers, who , in court papers, called the auction a “chaotic and disorganized spectacle.”
The FREO Group opened the auction in January with a bid of $17.4 million for the entire portfolio of nine properties. Nine others have joined the tender, but only on individual properties, not across the entire portfolio.
Maverick, through an entity called Brooklyn Lender, then stepped in with an offer of credit, or an offer using his existing debt on the properties, of approximately $20 million for the entire portfolio.
Despite Maverick’s higher bid, the Strulovitch entities selected Maguire, Wertzberger and Mikkelson as auction winners, arguing that their individual bids had a larger cash component, which meant more money to pay professionals. and real estate expenses.
Maverick disputed this, stating that he was the true winner of the auction, as he had placed the highest bid. The lender further alleged a number of flaws with the bankruptcy process, including that debtors did not consult it on the terms of the auction.
A third auction date was scheduled to take place in February, but Maverick decided against its offer.
Westchester County Bankruptcy Judge Robert Drain approved the sale to individual bidders on Monday.
The marketing and sales process was led by Greg Corbin, president of bankruptcy and restructuring at Rosewood Realty Group. Corbin declined to comment.
Strulovitch’s legal troubles date back to 2017, when Maverick purchased $40 million in loans tied to his portfolio from Signature Bank. Maverick initiated the foreclosure within six months, alleging the landlord was in default in part because Strulovitch failed to disclose the true owner of the properties.
Strulovitch had concealed the ownership of real estate investor Joshua Wagschal in order to protect Wagschal from creditors, Maverick argued.
Around the same time, a group of Israeli investors alleged that Strulovitch and his partners had defrauded them out of $20 million in a Madoff-style Ponzi scheme. They claimed to have invested in 20 properties co-owned by Strulovitch and his business partners, who then illegally borrowed against those assets many times their value to purchase additional properties.
Companies linked to Strulovitch’s properties filed for bankruptcy two years later. But instead of filing in Brooklyn, where the buildings are located, Strulovitch took his case to Judge Drain, who oversaw Purdue Pharma’s controversial Chapter 11 proceedings and has a debtor-friendly reputation. Strulovitch also brought in David Goldwasser, a Florida-based bankruptcy specialist, as a restructuring agent.
Jen Recine, co-chair of the real estate litigation practice at Kasowitz Benson Torres, which represents Maverick, declined to comment. Maguire Capital’s Azrak also declined to comment.