A 15-unit development at 19 Hausman Street in Greenpoint, which topped The Real Deal’s list of the largest Brooklyn condo projects in 2019, filed for bankruptcy in April and is now being sued by its creditors.
Just three years ago, Rafi Manor’s firm, M Development, was a leading developer in Brooklyn with 12 active projects. Now, Manor is facing foreclosure actions on four Brooklyn properties he helped develop: 135 Bayard Street, 517 Brooklyn Avenue, 744 Lefferts Avenue and 52 Herbert Street.
Last year, lender Realya Investments sued Manor and an LLC tied to his firm for defaulting on acquisition loans at 54 Dupont Street in Greenpoint. Realya also sued Manor for allegedly breaching a loan agreement at 517 Brooklyn Avenue in Crown Heights.
Manor and the LLC, M1 Development, argued that they were only listed as guarantors on the loan, and were not parties to the loan agreement. The court disagreed, ordering Manor and M1 to pay the loan agreement, including principal and interest, which amounted to about $1.6 million plus interest at a rate of $512.33 per day.
A few months later, Manor and M1 filed for bankruptcy to satisfy their debts and reorganize. According to court documents, liabilities for M1 Development total $2.72 million, but it only has about $357,000 in assets from an ownership interest in several LLCs. Manor’s personal liabilities total approximately $6.2 million.
Four of the LLC entities in which Manor and M1 Development have an ownership interest are facing foreclosure actions, which the bankruptcy court allowed to proceed.
In court documents, Manor says changes to the New York City building code and increases in the cost of construction materials led to unanticipated expenses. He also said the pandemic stalled construction projects, further complicating his financial situation, though both lawsuits were brought against Manor before pandemic-related lockdowns began.
The 19 Hausman Street property previously faced a foreclosure action in 2019 by its former lender Tideway Capital Funding, but that situation was resolved, paving the way for Realya to step in as the project’s new lender.
Manor’s lawyers are now attempting to move the Realya lawsuits from state court to the Southern District of New York.
Manor could not be reached for comment. Representatives for Realya Investments and Realya Crown Heights LLC did not respond to requests for comment.
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