Fight over ‘The One’ mega-mansion heads to Bankruptcy Court

Los Angeles Times
October 27, 2021

The Los Angeles Times reported “The One” mega-mansion was pulled Wednesday, October 27 from the auction block, one day after the developer’s limited liability company filed for Chapter 11 bankruptcy protection to stop the sale.

The 105,000-square-foot Bel-Air mansion was set to go to the highest bidder at a trustee’s sale outside Los Angeles County Superior Court in Pomona after developer Nile Niami’s Crestlloyd defaulted on $106 million in debt owed to Hankey Capital, Los Angeles billionaire Don Hankey’s real estate lending business.

Crestlloyd was placed into bankruptcy protection Tuesday afternoon in what proved to be a successful last-minute bid to block the foreclosure sale, moving — at least temporarily — a high-stakes fight between the developer and multiple feuding lenders to U.S. Bankruptcy Court in Los Angeles.

The disposition of the largest modern home in the country — once marketed for $500 million and the magnum opus of Niami, dubbed the king of the L.A. mega-mansion — now goes before Bankruptcy Judge Deborah Saltzman, a 12-year-veteran of the bench.

Danning Gill Partner John Tedford, who worked for a client involved in another foreclosure dispute with Hankey Capital, told the Los Angeles Times that the bankruptcy case was unusual because it involved a single-family residential property with a value more typical of commercial real estate.

That means the effort to persuade the judge to keep the case in Chapter 11 and not allow the foreclosure sale to proceed will focus on convincing her that there is adequate value in the property to ensure Hankey Capital is repaid what it is owed.

“If the property is worth less than Hankey Capital is owed, the judge is more likely to allow Hankey to proceed with its foreclosure,” he said. “It becomes a battle of experts — Crestlloyd’s appraiser versus Hankey Capital’s appraiser — with the judge somehow having to decide how much this unique property is worth.”

If Crestlloyd makes interest payments on Hankey’s debt — which it may or may not be required to do — that also would be a factor in the judge‘s decision, he said.

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