The developer of ‘The One’ mega-mansion filed for bankruptcy protection on Tuesday in a last-minute bid to stop a planned auction of the sprawling estate.
Nile Niami’s limited liability company, Crestlloyd, filed for Chapter 11 protection shortly after noon in US bankruptcy court in Los Angeles.
Lawrence Perkins, newly appointed director of the development company, said the action comes with an automatic stay of the trustee sale, scheduled for Wednesday, and other collection activities against Crestlloyd.
“Our goal is to maximize the value of the home through a thoughtful sales process where we can engage brokers and show the home to all the right people who need to see it,” said Perkins, of Sierra Constellation. Partners, a turnaround company.
The 105,000 square foot Bel-Air property is the largest modern home in the United States and the most extravagant property to date for Niami, known as the king of the Los Angeles mega-mansion.
The trustee’s sale of the once-marketed home for $500 million was slated after Crestlloyd defaulted on $106 million due to Hankey Capital, the home lending arm of Los Angeles billionaire Don Hankey.
The auction at Pomona Civic Center Plaza has already been delayed twice, most recently on Oct. 13 after another lender — Joseph Englanoff’s Yogi Securities Holdings — alleged Hankey pulled out of a deal so that the house to be completed and listed by real estate brokers for $225 million. .
C. Kerry Fields, professor of clinical finance and business economics at USC’s Marshall School of Business, said filing for bankruptcy was the only legal maneuver Niami had to stop the auction.
“The Bankruptcy Court [can] make a decision as to which position will prevail in allowing the trustee sale to proceed or be put on hold pending resolution of certain issues the developer may wish to present to the court,” he said.
He also said the judge could have the house sold through the bankruptcy court in a way that would be superior to selling by a trustee. Such auctions typically leave little or nothing for junior lien holders such as Yogi, experts say.
Englanoff, a Los Angeles-area doctor and longtime investor in Niami’s developments, accused Hankey of trying to grab the mansion at a rock-bottom price or taking all the proceeds if sold. .
Yogi loaned Crestlloyd $30.2 million in 2018 and still owes $22 million, according to an earlier statement Englanhoff filed in support of a temporary restraining order to stop the auction. Hankey loaned Crestlloyd $82.5 million in 2018 and $23.5 million in two additional loans. Englanloff says his debt should be paid before Hankey’s subsequent loans.
Los Angeles County Superior Court Judge Mitchell Beckloff did not issue the temporary restraining order, but delayed the auction until October 27 to give both parties time to find a OK.
Hankey told The Times he tried but was unable to come to an agreement with Englanoff. Hankey Capital’s attorneys said the company’s actions were legal and noted that there was nothing stopping Yogi from bidding for the house itself.
The other main holder of secured debt is an entity called Inferno Investment, associated with Julien Remillard, a longtime friend of Niami, who loaned Crestlloyd more than $10 million in 2015 but struck a deal with Hankey to be paid second from the proceeds of the sale.
There is smaller unsecured debt attached to the property, including several million dollars owed to contractors and others, according to the filing. The total debt attached to The One has been estimated at $165 million.
In the spring, after Niami defaulted on his debt to Hankey, he offered to live at The One and transform it into an event space offering entertainment such as boxing matches and concerts. Hankey was not interested in the plan.
The 944 Airole Way mansion boasts luxurious amenities such as infinity pools, a spa and beauty salon, a billiard room and bowling alley, a multiplex movie theatre, and a 50-car garage with carousels for display exotic cars.
Hankey did not immediately respond to an email seeking comment on the bankruptcy filing. An attorney representing Yogi also did not respond to a call for comment.
The filing comes as a court-appointed receiver works to complete the home, which was unfinished at the time Crestlloyd lost control of the property.
This story originally appeared in Los Angeles Times.