Bankruptcy Battle Breaks Out Over Greenwich Village Dev Site – The Real Deal

UPDATED April 27, 10:50 p.m.: George Filopoulos gave up on a Greenwich Village building, but the troubled loans left behind have triggered a bizarre legal fight over the property, which is now being offered for sale as a condominium development site.

The drama began when the longtime real estate investors LLC was notified in August 2020 that it had defaulted its $9.3 million first mortgage at 307-309 Sixth Avenue.

The LLC in which Filopoulos says he owned a 10 percent interest in separate from his firm, Metrovest Equities failed to repay the loan at its maturity date and lender Castellan Capital filed to foreclose.

The case laid quiet during the pandemic and in December of 2021 Castellan sold its loan, according to property records. Filopoulos then transferred its interest in the property in May 2022, according to an attorney for his firm. A court filing does not say who took control of the ownership LLC. Paperwork for the entity was signed by a person named William Schneider, who in November filed project plans for a seven-story, 39-unit building with ground-floor retail and community space.

The judge in the foreclosure case ruled in June that the LLCs debt had grown to about $15 million, and a foreclosure sale was scheduled for Dec. 14.

But on the eve of the auction, another stakeholder went to bankruptcy court to prevent it from going through.

William Rainero, whose family sold Filopoulos LLC the property in 2017, said in court papers that he had provided the buyer a $5 million mortgage to close the $17 million deal. That loan is in the second position behind the one originated by Castellan.

Rainero argued in court papers that the new owner was conspiring to wipe him out by agreeing to hand the property back to the lender. The bankruptcy court agreed to put off the sale. The new ownership LLC filed its own bankruptcy case and the side-by-side buildings at 307 and 309 Sixth Avenue are now being marketed for sale by a team at Meridian Investment Sales led by David Schechtman.

The ownership LLC asserted in a January 2023 bankruptcy filing that Filopoulos, who owns the upscale Gurneys Montauk resort in the Hamptons, had recognized the Greenwich Village development site was underwater and had agreed not to contest the foreclosure and to transfer ownership to an entity affiliated with his lender.

Filopoulos disputes that, saying he has nothing to do with the bankruptcy case and divested his interests in the property after trying to find retail tenants for it.

The Rainero familys attorney, meanwhile, said they will enforce their rights in the owners bankruptcy case.

My clients the Rainero family have owned property in Greenwich Village for over 100 years, attorney Bruce Bronson wrote in a text. They are owed $7 million and expect to be paid. Filopoulos said that second mortgage became the buyers responsibility when he sold the two-story Sixth Avenue buildings.

In court papers, Rainero insinuated that the lender may be paying the LLCs legal fees in order to take the property over.

The independence of the debtor is critical to the proper marketing of the property to obtain the best price, his lawyers wrote.

This story and the photo were updated after George Filopoulos provided evidence he sold his interest in the property prior to the ownership group filing for bankruptcy, which he and Metrovest are not parties to.

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Bankruptcy Battle Breaks Out Over Greenwich Village Dev Site - The Real Deal