Lawsuits | Jul 16, 2024
Fortress Investment Group is one step closer to potentially triggering “one of the largest foreclosures in American history,” according to financial news outlet Benzinga—and the design industry is caught up in the turmoil. The lender’s latest court filings outline its revised foreclosure plans against Cohen Brothers Realty. If successful, the case is poised to see new ownership for the Design Center of the Americas in Dania Beach, Florida, as well as upend the way commercial real estate debt is collected.
Back in early June, Charles Cohen—the billionaire landlord whose company’s holdings include design centers in New York, Houston, Los Angeles and Dania Beach—managed to temporarily stave off a $544 million foreclosure brought by the lender. At the time, a New York Supreme Court judge ruled that the proposed foreclosure proceedings would not be “commercially reasonable” under the state’s Uniform Commercial Code—a set of laws that govern commercial transactions—but gave Fortress an opportunity to submit a foreclosure plan with revisions by July 15.
On Monday, Fortress submitted the updated proposal, which includes new details meant to address concerns brought forth by Cohen’s team and the court at the last hearing in late May, such as a description of the pledged interests or assets owned, the terms of the sale, and the eligibility of bidders.
According to the filing, Fortress worked with a team of outside professionals specializing in UCC auctions to revise the proposal, and attempted several times to meet with Cohen Brothers Realty representatives, who “have not meaningfully engaged with Fortress regarding their purported concerns about the new proposed plan.” The filing claims that the objections Cohen Brothers Realty has voiced—including a nine-month marketing period rather than the plan’s 60 to 90 days—are “unsupported by law and fact, and do not serve as a basis to further enjoin this agreed-upon Auction.”
In the revised proposal, Fortress outlines the impacted Cohen Brothers holdings and details its intentions to sell them in five individual auctions, starting with the Design Center of the Americas. (Additional auctions will offer the hotel Le Méridien Dania Beach at Fort Lauderdale Airport; the property development site at the former Doral Arrowwood Golf Club; the Landmark Theatres business and three theaters; and the Curzon Cinemas business.) Following the individual auctions, any interests that are unsold will be offered in a single, bulk auction. The document also sets a date for the auction—November 8, beginning at 12 p.m., at Kirkland & Ellis LLP’s New York office or via Zoom—and states that any party who signs an NDA and registers with real estate company Newmark can access the times and places of individual auctions and further details on terms of sale.