Herrick Feinstein Guides Hotel From Lease Suit To $177M Sale

June 3, 2024 – Media Mention

Herrick partners Stephen Selbst and Janice Goldberg spoke with Law360 about the progression of one of their cases that began as a straightforward commercial lease dispute and evolved into a multifaceted adversarial proceeding that recently came to a close with the $177 million sale of the William Vale Hotel in Brooklyn.

On May 29, a New York bankruptcy court signed off on a Chapter 11 plan and settlement between owner Wythe Berry Fee Owner LLC amid bankruptcy proceedings tied to the William Vale hotel. This case spanned years of litigation and as the case grew, Herrick told Law360, the firm relied on input from experts across its practice areas to reach the deals approved last week.

"This case started as a commercial lease action, very, very typical and normal Herrick real estate-focused litigation that me and my partners in the litigation department handle all the time," Janice said. "Then it became a bankruptcy matter... and we used the restructuring practice to incorporate those areas of expertise and then over time, the matter further developed into bringing in pretty much all aspects of Herrick's different departments."

"When Herrick was hired originally, it was because the ground tenant owed $7.5 million of rent to the owner under its then ground lease," Janice said. "Herrick was originally brought on to commence an action in state court on the lease to recover the unpaid rent or evict the ground tenant."

The Vale's mortgage was handed over to AYH bondholders amid AYH's separate bankruptcy proceedings, and they kickstarted bankruptcy proceedings against the Vale owner as mortgage payments stacked up.

Janice and Herrick partner and Restructuring & Finance Litigation co-chair Stephen Selbst told Law360 that team overcame the first major obstacle along the way to Wednesday's approval when Weiss opposed the bankruptcy proceedings outright. Judge Glenn denied Weiss' motion to dismiss the Chapter 11 in January 2023. 

"We had a fight with Weiss from October 2022 to January 2023 about whether this case belonged in bankruptcy and Weiss opposed it," Stephen said. "Our position was yes, of course this case belonged in bankruptcy; we were frozen... we had no access to cash because Weiss, our tenant, had not paid the rent... and we had no ability to pay our mortgage."

"Settling with Weiss wasn't an easy project," Stephen added. "It was an all-hands-on-deck effort from the first of the year until the end of April, when we finally entered into the settlement agreement."

Avery S. Mehlman was also a lead partner on the Herrick team. 

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