Fight over The One mega-mansion heads to bankruptcy court

Fight over The One mega-mansion heads to bankruptcy court

10/27/2021 11:04:00 PM

Fight over The One mega-mansion heads to bankruptcy court

An auction for the Bel-Air mansion is called off after the limited liability company that owns it files for Chapter 11 bankruptcy protection.

The idea was simple: Nile Niami would build and sell The One, the biggest and most extravagant new home in the country. Then things went sideways.Lawrence Perkins, appointed manager of Crestlloyd this week, said the focus will be on completing the home, marketing it and ensuring it is seen by prospective high-level buyers — including one who ultimately purchases it.

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The mansion at 944 Airole Way features ultra-luxury amenities such as multiple pools, a spa, a beauty salon with washing, cutting and pedicure stations, cigar and candy rooms, a four-lane bowling alley, a rooftop putting green and a multiplex-size movie theater.

“This isn’t just a regular home to sell, so there’s certain steps you need to take to be able to deal with a home like this,” said Perkins, chief executive of turnaround specialistSierraConstellation Partners. “It starts with money, and working out a deal to be able to execute [all] that is probably the top priority right now.” headtopics.com

He said the plan will be laid out in detail in the coming weeks in bankruptcy court, where Hankey could seek to have the process halted. The trustee’s sale was postponed until Nov. 29.The goal is to get the highest sales price for the house while maximizing the proceeds to the creditors, which include not only Hankey, but also other secured construction lenders who are owed tens of millions of dollars, and unsecured creditors such as vendors and contractors.

A last-minute bankruptcy filing aims to block auction of ‘The One’ mega-mansionDeveloper Nile Niami’s Crestlloyd LLC filed for Chapter 11 on Tuesday, one day before a trustee’s sale of the mega-mansion had been scheduled.Attorney John Tedford, a partner at Danning Gill in Los Angeles who worked for a client involved in another foreclosure dispute with Hankey Capital, said the bankruptcy case was unusual because it involved a single-family residential property with a value more typical of commercial real estate.

That means the effort to convince the judge to keep the case in Chapter 11 and not allow the foreclosure sale to proceed will focus on convincing her that there is adequate value in the property to ensure Hankey Capital is paid back what it is owed.“If the property is worth less than Hankey Capital is owed, the judge is more likely to allow Hankey to proceed with its foreclosure,” he said. “It becomes a battle of experts — Crestlloyd’s appraiser versus Hankey Capital’s appraiser — with the judge somehow having to decide how much this unique property is worth.”

If Crestlloyd makes interest payments on Hankey’s debt — which it may or may not be required to do — that also would be a factor the judge would consider in making that decision, he said.Perkins said it’s Crestlloyd’s belief there is a “lot of value” in the house and said his firm would try to work with Hankey to sell the house in bankruptcy court. headtopics.com

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Crestlloyd, in bankruptcy court papers, values the home at $325 million and says it carries a total of $180 million in debt, including $176 million that is allegedly secured — enough to pay creditors even if the house sold for less.Hankey has not returned emails for comment from The Times.

Wednesday was the third time the trustee’s sale was put off. A July date was delayed until Oct. 13 by Hankey, who decided to put the house into the hands of a receiver tasked with completing it and marketing it for sale. The plan had the support of Niami, as well as other lenders who lent millions to the project.

Just this month, the court approved a deal with two brokers to list the home for $225 million.However, Hankey decided to push ahead with the Oct. 13 auction, prompting lender Joseph Englanoff’s Yogi Securities Holdings to seek a temporary restraining order to block it. Yogi lent Crestlloyd $30.2 million in 2018 and is still owed $22 million, according to a declaration that Englanhoff filed in support of that case.

Englanoff, a Los Angeles-area physician and longtime investor in Niami’s developments, accused Hankey of trying to take ownership of the mansion at a rock-bottom price by buying it himself at the auction, or take all of the proceeds if it was sold to a third party. headtopics.com

Superior Court Judge Mitchell Beckloff did not issue the temporary restraining order butdelayed the auction until Oct. 27to give the two sides time to work out a deal.Hankey previously told The Times that he had tried but failed to come to an agreement with Englanoff. At a separate state Superior Court hearing on Tuesday called by the receiver, attorneys for Hankey and Yogi did not indicate any deal had been worked out.

The other major secured debt holder is an entity called Inferno Investment, associated with Julien Remillard, a longtime friend of Niami, which lent Crestlloyd more than $10 million in 2015 but worked out a deal with Hankey to be paid second out of the sale proceeds.

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An attorney for Remillard declined Wednesday to comment on the bankruptcy action.There are also several million dollars in unsecured debt attached to the property to contractors and others, according to the bankruptcy filing.That includes $750,000 owed to Creative Art Partners, which provided the house with art — and whose debt is disputed by Crestlloyd — and $275,705 to Vesta, which staged it with furniture and accessories. Another $400,000 is owed to Branden Williams, an earlier listing agent on the house.

A critical question now will be how long will it take to finish the house and complete any necessary repairs. The home does not have a certificate of occupancy from the city of Los Angeles, which means it cannot be lived in.This is not the first time that Niami has run into trouble with his spec homes, which are built without a particular buyer in mind. Nor is it the first Niami home placed into bankruptcy.

He was one of the most successful developers of L.A. mega-mansions before competition arose from other spec builders. Sales slowed and this year he unloaded several homes under their initial asking price. Read more: Los Angeles Times »

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