Sharif El-Gamal is making a last-ditch bid to fend off a lender’s almost $90 million declare tied to the Margaritaville Hotel in Instances Sq..
In a brand new lawsuit, El-Gamal claims lender Arden Group rigged a 2023 foreclosures sale to field out different bidders and take management of the entity that owned the 234-key lodge, at 560 Seventh Avenue, with a $1,000 credit score bid. He claims the transfer suppressed the property’s worth and prevented him from accumulating earnings from a third-party sale.
El-Gamal claims Arden’s technique was to take management of the lodge’s collateral after which pursue the person guarantors in court docket for tens of millions — which he says is strictly what occurred.
The lawsuit additionally claims that Arden principal Greg Denton “had shaped an intense private dislike of” El-Gamal that, “self-consciously drove the lenders’ pondering, at the least partly.”
In a single electronic mail shortly after the UCC sale, the lawsuit alleges, Denton argued in opposition to an anticipated $85 million bid for the mortgage and as a substitute advocated “pursuing generalized outreach” to a textile manufacturing unit proprietor in India who “hates Sharif a lot he’s contemplating shopping for our mortgage simply to fuck with him.”
An legal professional for Arden didn’t instantly reply to a request for remark.
The dispute stems from a $57 million senior mezzanine mortgage that Arden supplied to El-Gamal’s Soho Properties in September 2021. The mortgage was secured by a one hundred pc fairness stake within the entity that owned the lodge. On the time, a third-party appraisal valued the lodge at $268 million, and its worth was allegedly anticipated to rise above $300 million because the newly opened lodge stabilized, in response to the lawsuit.
The lodge opened in July 2021, however income struggled to ramp up rapidly sufficient to fulfill debt obligations after pandemic-related delays and value overruns. El-Gamal defaulted on an curiosity cost in March 2023, and the lenders started getting ready for a UCC sale. After El-Gamal and his companions put their fairness stake within the lodge into chapter 11 to stall a foreclosures, Arden and Corten went after them personally for the lodge’s mezzanine debt.
The public sale was ultimately held in October 2023, and Arden was the one bidder. El-Gamal alleges the method was designed to discourage outdoors bidders by requiring a $5 million deposit, imposing guidelines “laced with poison,” and circulating supplies to potential bidders that had been “replete with factual inaccuracies and materials omissions.”
The lenders are nonetheless pursuing El-Gamal and his companions, Flintlock Development Providers’ Andrew and Stephen “Chip” Weiss, for almost $90 million. However El-Gamal argues that as a result of the lender acquired the collateral for a worth far beneath what an arm’s-length purchaser would have paid, it misappropriated greater than $100 million in worth that’s really as a result of him.
El-Gamal is looking for financial damages from Arden. His attorneys didn’t reply to requests for remark.
Learn extra
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