At 10 on a Tuesday morning in late December, representatives of the Fisher Brothers met in the well-appointed offices of the law firm Paul Hastings at 75 East 55th Street to close on the sale of a $227 million ownership stake in an East River development company to the apple-cheeked, art-loving billionaire landlord Sheldon Solow.
He never showed.
And what began as a partnership to redevelop the wastelands south of the United Nations into a $4 billion Xanadu of apartment houses, an office tower and greenswards has devolved into a legal skirmish over the remaining $111 million that Mr. Solow allegedly owes the Fishers.
The Solow-Fisher partnership began with a bang in 2000, when the duo outbid a brawny joint venture of Mort Zuckerman’s Boston Properties and billionaire Leonard Litwin to buy 9.2 acres from Con Edison for a staggering $600 million.
At the time, a prescient Donald Trump told The Observer that he was glad he had stayed out of the running. “It’s going to be very long, very tough,” Mr. Trump said.
And so it’s been. It wasn’t until last year that Mr. Solow finally gained City Council approval to rezone the 9.2 acres. Now, he’s battling the Department of Environmental Control over whether he should be awarded state brownfield incentives. And, in December, Citibank sued Mr. Solow for an $85 million debt related to the project.
The new Fisher lawsuit, filed in Manhattan Supreme Court on Jan. 14, alleges that Mr. Solow breached his contract to purchase the Fishers’ minority stake in the East River Realty Company for a total price of $227,036,693.
According to that contract, signed on Jan. 4, 2007, Mr. Solow would acquire the Fishers’ 15 percent ownership stake in the East River Realty Company, thereby giving him full control.
He paid $35 million up front and initially agreed to pay the remainder on June 29, 2007. But during the course of 2007 and 2008, he continued to request, and to receive, extensions on the agreement. The most recent amendment to the purchase agreement set the closing date for Dec. 30, 2008. As said date drew nearer, Mr. Solow began negotiating for yet another amendment.
What happened next depends on which legal document you read: The Fishers allege that they rejected Mr. Solow’s request for another extension and made absolutely clear that the closing date was Dec. 30. Mr. Solow argues that none of the amendments “stated that time was of the essence,” so when the Fishers sent a letter to him on Dec. 24 demanding a final closure, he was caught off guard.
According to Mr. Solow’s response, “By insisting on Christmas Eve, at 4:30 p.m., that the closing take place on Dec. 30, Fisher made it impossible [for him] to secure the necessary financing to close.”
Indeed, Mr. Solow goes so far as to allege that the Fishers, by demanding the closing take place with short notice, masterminded a default on his part. Now, Mr. Solow wants either $116 million of his money back, plus interest, or damages.
And his East River development?
“Oh, gosh, I really can’t predict,” said Lyle Frank, 37, chairman of Community Board 6. “Honestly, in my lifetime, which isn’t so long, this is the most unprecedented economic situation I’ve ever seen. This is just so unpredictable. … I really don’t know.”
drubinstein@observer.com
