60-Day Reprieve Conditioned On Loss Of Down Payment
By Tina Traster
The Brooklyn group under contract to purchase the HNA Training Center in Palisades from its Chinese-owner has been given more time to close on a deal that stalled last month. HNA has agreed to allow the closing deadline for ZVG@Palisades LLC, an entity affiliated with Vasco Ventures, to Nov. 12th, according to court documents.
ZVG, on behalf of Vasco Ventures, had been seeking relief from the bankruptcy court after filing a Chapter 11 petition in the Eastern District of New York asking a judge to impose a 60-day extension to enable it to close the transaction. The buyer did not have the roughly $40 million purchase price at the original closing deadline on July 10, 2019.
The property, located at 234 Route 9W, includes a hotel and conference center. The property sits on a secluded tract of 106 bucolic acres.
In court filings last week, HNA chose not to contest Vasco Venture’s request for 60 additional days to close. However, the agreement was contingent upon HNA keeping the $8 million deposit as liquidated damages. The agreement also stipulates there will be no additional court proceedings even if Vasco Ventures not does close.
Vasco Ventures has not yet responded to the motion filed in court but the issue will come before the court on Oct. 23rd in a case management conference.
Vasco Ventures will likely accept the deal because of a possible defect in its bankruptcy proceeding that could lead to the case being dismissed. According to HNA, Vasco Ventures never completed the assignment of the contract to the entity ZVG@Palisades.
On April 4, 2019, HNA and Vasco Ventures LLC entered into an Agreement of Purchase and Sale. Vasco Ventures has not filed for bankruptcy. It is Vasco’s assignee, ZVG that filed the bankruptcy petition.
Under the original agreement, the buyer deposited $2 million in escrow, and if it failed to close HNA could retain the $2 million as liquidated damages.
Between April 2019 and August 2019, HNA and the buyer made four amendments to the contract. Each amendment extended the closing deadline and increased the total the buyer was required to deposit with the escrow agent. The last amendment set the closing date for Sept. 12, which the buyer missed. It also increased on a daily basis the amount of escrow by $12,500 from August 12-25, and by $15,000 for every day hereafter. If the buyer had met the scheduled closing date, it would have paid $40,480,000 – nearly $500,000 above the original purchase price.
A Nov. 12th closing would increase the total purchase price to $41,380,000, plus the legal fees.
Vasco Ventures, a south Brooklyn-based, real estate investment business buys commercial and residential real estate. Vasco Ventures, founded by Ephraim Vashovsky in 2008, describes itself as a leader in “distressed and undervalued” real estate.
Vashovsky has previously focused on buying city residential buildings to upgrade them, and then rent or sell them in a much-improved state. More recently, Vasco Ventures has shifted to larger properties, such as the 2017 acquisition of the Griffin Office Park Portfolio in Hartford, Connecticut, for a reported $5 million. That five-building, 375,000-square-foot suburban office campus sits in the Griffin Office Center, a 600-acre development in greater Hartford.
Vasco Ventures also has buildings in Indianapolis, Philadelphia, and New York.
In 2017, Vashovsky pleaded guilty to reckless endangerment in the first degree, a felony, one count; and endangering the welfare of a child, a Class A misdemeanor; in a case involving a building on East 115th street in Manhattan. Vashovsky had bought the building for $3 million with a plan to renovate and rebuild luxury apartments. A family with five children under the age of 12 were living in the building. To force them out of their $2,400 a month rent stabilized apartment, it was alleged that Vashovsky gutted the building around them, cut off water and heat; and, according to the Manhattan district attorney, orchestrated a campaign of harassment. Vashovsky was sentenced to twenty days community service and forfeiture of $350,000.