Lehman Begins Foreclosure on Swig’s 45 Broad Street (Updated)

Lehman Brothers has begun foreclosure proceedings on Kent Swig’s apparently catastrophic project at 45 Broad Street. The foreclosure proceedings were

Lehman Brothers has begun foreclosure proceedings on Kent Swig’s apparently catastrophic project at 45 Broad Street.

The foreclosure proceedings were initiated on Thursday, Jan. 22. 45 Broad LLC and Kent Swig, president of Swig Equities, are named in the suit, along with various organizations that have filed liens against Mr. Swig (and thereby claimed an interest in the property).

Mr. Swig had been planning to erect, in partnership with Robert De Niro, a 62-story Nobu Hotel and Residences at 45 Broad Street, complete with 77 luxury condos, 128 hotel rooms and 13,000 square feet of retail.

Mr. Swig’s Web site contains a lavish description of the project:

The sleek all-glass tower will also offer luxurious amenities for use by both hotel guests and residents, including club and business lounges, meeting rooms, film screening room, and private wine and saki cellars. In addition, a 13,000 square foot health club and spa with an indoor swimming pool opening onto an outdoor sun terrace, as well as cosmetic treatment, sauna and steam rooms, dedicated yoga and pilates studio, cardio machines, and fitness center will also serve the guests and residents of the tower.

So much for that. According to the complaint, Lehman Brothers sent three letters to Mr. Swig, on April 23, 2008, September 12, 2008, and January 7, 2009, demanding repayment.

Update: The complaint reads, in part:

"This is an action for the foreclosure of two commercial mortgages and for related relief regarding two commercial loans secured by liens on real property located in New York County commonly known as 45 Broad Street …"

"45 Broad has defaulted under the terms of the Loan Documents by, inter alia, failing to pay all unpaid principal and interest on the Notes on the stated maturity date of February 28, 2008, when same became due…"

"45 Broad has also caused an Event of Default to occur under the Loan Documents by permitting the filing of a mechanic’s lien against the Mortgaged Premises by defendant Gilsanz."

The two mortgages include one made on June 12, 2006 for $37.7 million, and another made on Feb. 26, 2007 for $11.5 million. In the complaint, Lehman also asks that a receiver be appointed "to receive and collect the rents and profits of the Mortgaged Premises and take such action as is necessary to preserve the collateral during the pendency of this action with the usual powers or that Lender have possession thereof."

Update: In a November interview with The Observer, Mr. Swig attributed the slow progress at 45 Broad and at the nearby 25 Broad condo conversion to Lehman’s September collapse. Describing the government’s handling the Lehman fallout, he said, "“It’s like if you take the Los Angeles freeway and you’re in the middle of rush hour, you have one policeman, one judge, and [he] said, ‘I have to check everybody’s ID as you go by.’ The backup will go from Los Angeles to San Diego. Every surface street will be crippled.”

Update: In a statement, Mr. Swig’s spokesperson wrote: 

The action filed by Lehman Brothers Holdings, Inc. (“Lehman”) against 25 Broad, LLC, 45 Broad, LLC and Kent Swig is a retaliatory measure taken in response to a discovery motion filed by 25 Broad, LLC and 45 Broad, LLC against Lehman under Rule 2004 of the Federal Rules of Bankruptcy Procedure seeking discovery of the facts and circumstances surrounding Lehman’s commercially unreasonable conduct and deliberate delay and obstruction of the development of the 25 Broad Street and 45 Broad Street projects. 25 Broad, LLC and 45 Broad, LLC are seeking discovery as a precursor to bringing potential claims against Lehman for monetary damages and injunctive relief including fraud, breach of fiduciary duty, breach of the contractual duty of good faith and fair dealing, tortious interference with contract and tortious interference with prospective economic advantage.  25 Broad, LLC and 45 Broad, LLC expect to fully prevail against Lehman in the action it commenced and will hold Lehman fully accountable for its actions.

 

  Lehman Begins Foreclosure on Swig’s 45 Broad Street (Updated)