Madison Capital Gets Approval for Williamsburg Bankruptcy Sale

Joshua Zegen, Managing Director and Co-Founder, Madison Realty Group (Photo provided by Rosewood Realty Group / Frank Galasso, iStock)

Six years ago, Madison Realty Capital decided to seize a two-building building in Williamsburg. Owners Chaim Miller and Sam Sprei resisted. Since then, the two camps have been at war.

Now the end is in sight, and it doesn’t look good for both owners.

The 15-unit property located at 203-205 North Eighth Street is up for auction on December 9. The property was valued at $ 12.9 million last year, according to a court case filed by Madison Realty, which held a loan against it.

The dispute began in 2015 when Madison Realty alleged that the owners failed to make a monthly payment on a $ 3 million loan. Shortly thereafter, Madison declared the balance due immediately and initiated the foreclosure process. In October, Madison and the owners entered into a forbearance clause.

But Madison alleged that the borrowers violated the terms of the forbearance. In 2017, a judge authorized the lender to proceed with a foreclosure.

But Miller and Sprei still had some cards to play. The owners have filed nine show cause orders, pushing the case back for three years until a foreclosure sale is scheduled.

Then, in February 2020, before the sale could take place, the debtors filed for Chapter 11 bankruptcy, ending the foreclosure. This process lasted until a judge approved the restructuring plan in September.

Greg Corbin, President of Rosewood Realty Group Bankruptcy and Restructuring, spearheads the auction.

The sale signals the demise of Miller’s real estate empire. At one point, the Brooklyn owner had amassed over a million square feet and was looking to buy the Beekman Tower in Manhattan. Madison Realty was his preferred lender. But his plans have been marred by lawsuits, foreclosures and partnership disputes.

Madison Capital, led by Zegen, Brian Shatz and Adam Tantleff, is one of the most active lenders in New York’s commercial real estate market, and known for playing tough. The company recently got judge approval to go ahead with a UCC foreclosure on interest in Eli Karp’s Hello Living project in East Flatbush.

A spokesperson for Madison Capital declined to comment. An attorney for Miller and Sprei did not return a request for comment.

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