HFZ Capital Group has laid off a number of employees as the developer’s financial and legal troubles mount.
Two sources familiar with the matter said the layoffs and furloughs mainly affected people working in the construction side of the business and also those at the company’s main office at 600 Madison Avenue.
“Unfortunately, due to the prolonged nature of the pandemic and its expected timeline, HFZ has to furlough some of its employees, with the goal being to bring them back,” a spokesperson for HFZ said in an email. “Other employees were laid off.”
The developer has been under pressure as it deals with a slew of lawsuits from lenders and subcontractors over delinquent loans and unpaid bills tied to several of the firm’s Manhattan condos.
The layoffs, which come before the holiday period and as New Yorkers brace for another wave of Covid-19, will affect an estimated 20 to 30 jobs, according to a person with knowledge of the situation. That number could not be independently corroborated by The Real Deal.
The first signs of HFZ’s financial troubles emerged in September, when the mezzanine lender on four of the developer’s Manhattan condo projects, CIM Group, hired a brokerage to market the positions for a UCC foreclosure auction.
In October, Starwood Property Trust sued HFZ for allegedly defaulting on loan payments at a co-op conversion at 344 West 72nd Street.
Then, this month, the lender on HFZ’s planned Upper East Side condo project alleged that HFZ owed more than $18 million in defaulted debt. The loans had been personally guaranteed by Ziel Feldman and his number two, Nir Meir, the lawsuit said.
Last week, Feldman listed his triplex penthouse on the Upper East Side for $39 million. The 6,200-square-foot unit stretches across three floors at the Marquand building, which HFZ converted into condos in 2013.
HFZ was granted some relief this month when it went to court to stop CIM from going ahead with the UCC foreclosure auction, and a judge granted a temporary hold.
HFZ had argued the auction — for loans tied to condos at 88 and 90 Lexington Avenue, The Astor at 235 West 75th Street, and Fifty Third and Eighth at 301 West 53rd Street — was “commercially unreasonable” and a “predatory attempt to capitalize on the Covid-19 pandemic,” which would allow CIM to take over the properties.
The next court hearing is scheduled for Nov. 30.
Keith Larsen contributed reporting
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