Nearly a dozen apartment buildings owned by developer Emerald Equity Group in the Harlem neighborhood of Upper Manhattan, New York City, have filed for Chapter 11 bankruptcy — claiming a combined $1.1 billion in total liabilities with at least 47 contractors, material suppliers, and equipment lessors listed as creditors.
According to the bankruptcy filing, which was processed with the US Bankruptcy Court for the Southern District of New York, the 11 multifamily properties are each entities of Emerald Equity Group, a real estate development group owned by New York City multifamily investor, Isaac Kassirer.
The 11 entities are known as:
- 215 East 117 LLC
- 203 W 107th Street LLC
- 235 East 117 LLC
- 1661 PA Realty LLC
- 244 East 117 LLC
- 230 W 107th Street LLC
- 231 East 117 LLC
- 210 W 107th Street LLC
- 220 W 107th Street LLC
- East 117 Realty LLC
- 124-136 East 117 LLC
Emerald Equity Group purchased the entirety of the 1,181-unit, rent-stabilized portfolio of Harlem apartments back in 2016 for $357.5 million. The entire portfolio consists of over a dozen buildings.
Kassirer’s buildings, which are located within the vicinity of West 107th Street and East 117th Street in Harlem, are faced with a total of $1,114,673,293.58 in liabilities to hundreds of creditors with both secured and nonpriority unsecured claims.
Under Chapter 11 bankruptcy, the debtor is required to present a plan of reorganization — concerning the debtor’s business affairs, assets, and debts — to the appointed trustee and creditors. If the debtor does not submit the plan of reorganization, the creditors can do so. Businesses, individuals, partnerships, and corporations can all file for Chapter 11 relief.
16 secured claims in Emerald Equity Group bankruptcy filing all concern mechanics liens
Of the 47 contractors, suppliers, and equipment lessors that are listed as creditors to Emerald Equity Group, two hold secured claims.
Contractors DMT Plumbing & Heating Corp. and Superior Maintenance each have eight separate secured claims out of the 11 entities, with all sixteen combined claims concerning mechanics liens against the properties.
A mechanics lien — an unpaid construction work claim — provides unpaid contractors with a security interest in the serviced property until they have received payment for their work. If a lien is filed against a property, the owner is hindered from being able to sell or refinance until the debt has been settled.
DMT Plumbing & Heating’s eight secured liens total $43,362.45 in unpaid work, while Superior Maintenance is owed a combined $23,313.24 from their eight secured claims.
One of Kassirer’s lenders, LoanCore, currently has a $100 million secured claim concerning mortgages with all 11 entities.
DMT Plumbing & Heating also has nonpriority unsecured claims with five of the 11 entities, totaling an additional $11,541.35 owed to the contractor. The remaining 46 contractors, suppliers, and equipment lessors that hold non-priority unsecured claims include:
- ABEC Corp. – $15,296.50
- A Goldner Inc. (plumbing & heating contractor) – $2,495
- AAA Appliance – $1,344.11
- AB Fire Extinguisher – $554.83
- All County Sewer & Drain Inc. – $1,211.20
- All Make Appliance – $36,877.72
- Archrock LLC – $15,742.60
- Black Diamond Trucking Corporation – $120
- Business Electronics – $2,078
- Big Apple Elevator Industries – $62,477.90
- CNC Property Management LLC – $1,000
- Citylight Energy Inc. – $9,550
- City Wide Exterminating – $936
- Con Edison (gas & electric service) – $94,719.23
- Correct Temp – $77.22
- County Oil Co. – $22,745.04
- Elmax Builders Supply Co. – $36,205.47
- Excellent Boiler Service Inc. – $979.88
- Executive Engineering PC – $2,325
- Entech Boiler Controls – $7,507.45
- Entech Energy Design + Consulting – $2,461.59
- Forest Brook Electrical Contractors, Inc – $6,500
- J.C. Security Systems – $1,938.62
- Kolberg Building Consultants LLC – $13,000
- Len’s Appliance Inc. – $462.62
- MPG Consulting Inc. – $31,510.24
- M & M Glass LLC – $5,199.23
- Moon Construction – $18,000
- National Fire Extinguisher Co. Inc. – $114
- New York Water Management – $1,928.38
- Nunez Renovations – $650
- Orange and Rockland Utilities – $20,619
- PDG Building Consultants LLC – $21,601.46
- Plumbing Consultants LLC – $2,500
- Power Green Compactors, Inc. – $2,939.63
- RDS Windows Corp. – $2,166.55
- Roomors (retail shop) – $2,385.50
- S. Hyman Plumbing Supplies Co. – $532.37
- Street Rod Welding & Boiler Repair Inc. – $32,352.29
- Superior Appliance – $489.94
- Target Exterminating Inc. – $1,535.38
- Topline Construction LLC – $700
- Tri Boro Mold Remediation – $2,000
- Ultimate Boiler Treatments – $5,094.53
- Umbrella Locksmith – $1,550.38
The bankruptcy petition from entity 203 W 107th Street LLC states that Emerald Equity Group requested the properties be transferred over to LoanCore. Back in 2019, the lender provided the Emerald Equity Group with roughly $185 million in financing for the 11 properties. LoanCare has since defaulted on the loan, resulting in nearly $203 million in interest.
Around the same time period in early 2019, Emerald Equity Group also received a $189 million loan.
In November of 2020, Kassirer’s company defaulted on a $32 million loan with Ladder Capital, which helped finance four of Emerald Equity Group’s properties in Harlem.
As reported by The Real Deal, Kassirer successfully converted 251 units of his rent-stabilized East Harlem portfolio into market-rate apartments by the end of 2017.
But due to 2019 rent law changes in New York and the onslaught of the COVID-19 pandemic, Kassirer’s success in 2017 was short-lived.
The rent law imposed limitations of $15,000 ($83 per month) in recoverable costs of renovations over a 15-year period. The law also meant landlords, such as Kassirer, were unable to raise rents by 20% after a tenant leaves.
Under the rent law change, The Real Deal also states “a unit can no longer be removed from regulation based on the rent exceeding a certain threshold.”
Following the coronavirus pandemic, Kassirer was also hit with rent strikes at some of the entities that have since gone bankrupt. Also during the spring of 2020, several of Kassierer’s aforementioned loans were foreclosed.