The Bel-Air mansion called The One fetched $141 million at an auction that was targeting $295 million. Now the creditors are fighting for the crumbs.
The March sale of the 105,000-square-foot property to Los Angeles fashion mogul Richard Saghian meant some of the bankrupt Bel-Air project’s major lenders could be cut out of cash, given claims totaling more than $250 million, the Los Angeles Times reported. .
The 21-bedroom, 49-bathroom mansion at 944 Airole Way was the most expensive property ever sold at auction in the United States. But now one lender has brought an unfair business practices lawsuit against another, alleging someone falsified a document putting him in second line for reimbursement.
The lawsuit was filed last month in US bankruptcy court by the investment firm of Julien Remillard, a former longtime associate of developer Nile Niami.
The house’s bankrupt limited liability company, Crestlloyd, had sought court approval to pay nearly $104 million of the $138 million the estate received from the auction to another lender, the Los Angeles billionaire Don Hankey.
Hankey Capital, the estate’s largest creditor, made three loans totaling more than $100 million to Crestlloyd beginning in 2018. At stake is the repayment of the first loan, plus related interest and fees.
Hankey knows a thing or two about credit, having earned his money in car loans and real estate. Forbes once called him “the king of subprime auto loans.”
The Bel-Air estate has already paid priority claims such as taxes. With such a large payout for Hankey, there would be little left for other creditors, including Remillard’s Inferno Investment, which claims to owe him $20.9 million.
Inferno said it and related entities loaned $18 million to acquire the property in 2013 and to open what would then be a 40,000 square foot home.
Although Inferno loaned out before Hankey Capital, the lawsuit acknowledges that Inferno signed an agreement in 2016 allowing Crestlloyd to repay subsequent loans needed to complete the mansion even before Inferno was repaid for its investment. The deal also required Crestlloyd to obtain Remillard’s approval for certain loans that would become greater than Inferno’s debt, according to the lawsuit.
He alleges that never happened. Instead, the lawsuit claims Remillard’s signature was forged on an October 2018 subordination agreement allowing Hankey to be paid first.
The lawsuit accuses Hankey Capital of numerous wrongs, including unfair business practices, failing to monitor its loans and putting itself in a position to foreclose on the property.
Inferno asks a bankruptcy court judge to move him to the front of the line for repayment among the estate’s major secured creditors. He is also seeking to have the 2016 deal declared null and void, alleging Crestlloyd inflated bills from contractors and suppliers working on The One, diverting money to Niami and his estranged wife, Yvonne.
Hankey said he viewed the lawsuit as perhaps “just posturing to try and get something back.”
Hamid Rafatjoo, Niami’s lawyer, mocked the trial, which does not designate his client as the accused, as a ploy by the promoter’s former investor to cover his tracks. David Golubchik, the attorney for Crestlloyd, a defendant in the lawsuit, said the lawsuit halted any further payments to Hankey and would slow the liquidation of the bankrupt estate.
[Los Angeles Times] – Dana Barthelemy