The One auction delayed due to alleged takeover



A planned foreclosure auction of the nation’s largest modern house has been delayed after billionaire lender Don Hankey was accused of maneuvering to take control of the troubled Bel-Air project and leaving other holders to debts in the cold.

“The One,” an unfinished 105,000-square-foot mansion once marketed for $ 500 million, was due to be sold to the highest bidder on Wednesday. The auction was scheduled after developer Nile Niami’s limited liability company Crestlloyd defaulted on $ 106 million owed to Hankey’s mortgage arm.

But a Los Angeles County Superior Court judge postponed the trustee’s sale until later this month after lender Joseph Englanoff alleged Hankey reneged on a deal to have the house completed and sold by brokers. real estate, and instead used the auction process to unfairly take possession of it. of the mansion or monopolize the product if it is sold to a third party.

Englanoff, a Los Angeles-area doctor and real estate investor who loaned Crestlloyd $ 30.2 million in 2018 through his Yogi Securities Holdings, says in legal documents that he still owes him $ 22 million.

He said in a statement that he accepted Hankey’s offer to appoint a receiver in July to complete the house so that it could obtain a certificate of occupancy and be sold through a traditional listing. The luxurious 944 Airole Way mansion has several swimming pools, a beauty salon, a four-lane bowling alley, a multiplex cinema, a rooftop putting green and other top-notch amenities. range.

A contemporary 11-foot-tall sculpture sits on a rotating pedestal in The One’s foyer.

(Allen J. Schaben / Los Angeles Times)

He accused Hankey of continuing the auction to benefit the billionaire, even after two brokers agreed last month to put the property up for sale for $ 225 million.

“While the sale of The One is not expected to generate $ 500 million, it is certainly believed that it will be able to generate at least $ 225 million,” Englanoff wrote in his statement. “With a potential sale price of $ 225 million, all secured debts would be paid and even [the developer] would be net proceeds.

Hankey, 78, said in an email he had tried to strike a deal with Englanoff and “we never got along”. He defended his decision to proceed with the auction.

“The public sale represents a unique opportunity to own an iconic property in one of the most desirable locations in the world,” he wrote in the email.

Don Hankey at his Westlake Financial Services Headquarters in Mid-Wilshire.

Don Hankey, one of The One’s main lenders, wants to make a fiduciary sale of the property.

(Allen J. Schaben / Los Angeles Times)

In court documents, attorneys for Hankey Capital said the company’s shares were legal and noted that there was nothing preventing Yogi from bidding on the house itself.

Hankey made an initial loan of $ 82.5 million to Crestlloyd in October 2018, but the confrontation between the two lenders mainly centers on two additional loans totaling $ 23.5 million that Hankey Capital granted to Crestlloyd after Yogi Englanoff made his own loan of $ 30.2 million.

What kind of Brinks truck is going to pull up with a briefcase full of over one hundred million dollar bank checks?

John Tedford, Partner at Danning Gill

Englanoff said that Hankey Capital’s two successive loans, one for $ 8.5 million and the other for $ 15 million – as well as income from a profit-sharing agreement based on the sale price that Crestlloyd agreed with Hankey – should not be repaid until his own loan is satisfied.

Yogi also says that subsequent loans and an amendment to the original profit-sharing agreement invalidated the first priority of the debt owed to Hankey. In other words, if the house sold, Englanoff argues, Hankey shouldn’t see a dime until Englanoff’s own loan is fully paid off.

A view of a swimming pool at The One.

Disputes between lenders led a judge to delay an auction of The One.

(Allen J. Schaben / Los Angeles Times)

The other main debt holder is an entity called Inferno Investment, associated with Julien Remillard, a longtime friend of Niami, who loaned Crestlloyd over $ 10 million in 2015. It is the oldest loan outstanding. , which would generally give it priority over all other debts. and allow him to be paid first from the proceeds of the sale.

However, Hankey negotiated a deal with Remillard to be the primary lien holder in return for his $ 82.5 million loan, which was needed to help complete the project. This deal puts Inferno on the benefit list ahead of Yogi d’Englanoff. There are other smaller debts attached to the property, as well as money owed to contractors.

Englanoff also alleged that with the three loans and growing interest, Hankey would likely claim that his company owes more than $ 120 million from the sale of the trustee before any other lender is paid, which is about $ 38 million more than that. which is due to him.

The doctor said it would put off other bidders and could leave Hankey to own The One with a so-called credit offer, which is based on what he claims is owed to him and does not require a down payment. This would eliminate all other lenders, who would have their lien on the property wiped out by foreclosure.

“Hankey would become the owner of the property and there would be no excess / surplus payable to the applicant or any of the other junior lenders,” Englanoff said in the statement.

Hankey would then be able to do whatever he wanted with the property, including making a traditional sale that could potentially bring in over $ 200 million.

John Tedford, a partner at Danning Gill law firm in Los Angeles who worked for a client involved in a dispute with Hankey in another foreclosure case, said he didn’t think Englanoff would win with the argument that Hankey’s entire debt is subordinate to Yogi’s. However, he said the additional loans were another issue.

“The junior privilege holders probably have a good argument that their privileges are superior to the new elements,” said Tedford, who is not involved in the dispute involving The One.

Tedford said foreclosure sales typically leave little or nothing for junior lien holders, and a sale potentially requiring a cash offer of $ 100 million or more could be particularly difficult.

“What kind of a Brinks truck is going to pull up with a briefcase full of over $ 100 million cashier’s checks?” He joked.

In rendering his ruling, Judge Mitchell Beckloff last week rejected a request for a temporary restraining order, but still delayed the sale until October 27 to give the parties a chance to strike a deal.

He also granted Yogi’s request that Hankey Capital be required to provide a statement indicating the amount owed on its original loan of $ 82.5 million, including interest and any other charges. Englanoff made an offer to pay off Hankey’s debt of this amount to put an end to the foreclosure process.

Tedford said if the trustee’s sale was delayed, Hankey could withdraw the foreclosure notice and proceed with the $ 225 million listing. He could also seek foreclosure again at any time for a lesser sum.

The legal battle comes as court-appointed receiver Ted Lanes continues his efforts to sell the property. Last week, another judge approved a deal with Kurt Rappaport of Westside Estate Agency and Chris Adlam of Vista Sotheby’s International Realty to be joint listing agents.

Court-appointed catcher Ted Lanes walks through the floating lounge.

Court-appointed catcher Ted Lanes gives a tour of the floating lounge next to The One’s private nightclub.

(Allen J. Schaben / Los Angeles Times)

Lanes said if Hankey proceeds with the foreclosure and becomes the owner of the property, he would have the option to complete the listing transaction. Rappaport declined to comment. Adlam did not respond to requests for comment.

Lanes also hired San Diego construction consulting firm Xpera Group to analyze whether the house was built to Niami specifications after Bel-Air owners raised concerns about the build quality. Lanes said the company has already started its analysis.

Niami declined to comment, but hinted in a previous interview that he was having problems finishing the house because the money he was loaned was not paid in time to pay the contractors.

In the spring, after defaulting on his loan to Hankey, he offered to live in the house and transform it into an event space with entertainment such as boxing matches and concerts. Hankey was not interested in the plan.



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