New York’s hottest club might just be the bankruptcy court.
The owners of the Lower East Side party hall, the Bowery Savings Bank filed for Chapter 11 protection to avoid a forced sale after defaulting on its $12 million loan from Wells Fargoaccording to the documents filed in United States Bankruptcy Court for the Southern District of New York August 29.
Michael Marvisiowner of the building with his brother David Marvisi, the duo’s company said in court documents, 130 Acquisition Bowerywas forced to declare bankruptcy and fell behind on his loan once the building’s sole tenant, event organizer capital of new yorkmissed his rent payments during the pandemic, according to court documents.
The Marvisi brothers put the former 40,000 square foot bank in 130 Bowery Street went on sale in January for around $35 million, a month before Wells Fargo sued them for allegedly missing two years of loan payments. Wells Fargo hoped to force the sale of the 129-year-old building through an auction, but a bankruptcy filing will give the Marvisis time to sell the property for a higher price, Adam Stein Sapirbankruptcy expert and portfolio manager at Pioneer Funding Groupwho is not involved in the case, told Commercial Observer.
“The most likely scenario is a sale of the building,” Stein-Sapir said. ” Above all, [Michael Marvisi] personally guaranteed the loan. If the building sells for less than $12 million and Wells Fargo doesn’t get all of its money back, they’ll sue Marvisi for the difference.
The Marvisis first nabbed the Bowery Saving Bank, designed by famed Gilded Age architect Stanford White, in 2017 in a deal that valued the property at $33 million, according to property records. First they have attempted to unload the building in 2019 through an auction and hoped to fetch more than $50 million, Bloomberg reported.
But even if the Marvisis avoid a forced sale, they may not be able to recoup their initial investment because buyers may not claim a property with a single tenant who cannot pay their bill, Stein-Sapir said.
Capitale, which organized top-of-the-range evenings during Colombia University and Goldman Sachs, is leasing the property for $118,571 a month under a lease that will not expire until 2032, according to court records. It’s unclear how many months Capital has gone without paying for the space.
The Marvisis could also refinance the property to escape the “debt spiral” the brothers found themselves in after they first defaulted on the loan in August 2020, which allowed Wells Fargo to bill the duo a higher interest rate of 9.8% on their late payments, Stein-Sapir said. But finding new capital, especially given the high interest rate environment, could be a tricky task, he added.
The lawsuit isn’t the only legal problem David Marvisi has faced recently. He was convicted of allowing a public nuisance after renting his Los Angeles home to a group of ICT Tac stars hosting a party in the summer of 2020, breaking the region’s COVID-19 public gathering rulesaccording to Spectrum News.
Capitale, Marvisis’ attorney and Wells Fargo did not immediately respond to requests for comment.
Celia Young can be contacted at [email protected].