Lender alleges the now-jailed landlord refused to close, breached contract
Art Capital, a financial firm specializing in art-backed loans, is suing jailed landlord Steve Croman and his wife Harriet for allegedly backing out of a $50 million loan Croman sought following his guilty plea to mortgage and tax fraud charges in June.
According to the complaint, Croman signed a term sheet for a $50 million loan backed by his Upper East Side Mansion and 38 pieces of fine art. The term sheet included exclusivity and payment of expenses provisions and the Cromans wired a $50,000 deposit, the suit says. Croman sought the loan, according to Art Capital’s filing, because he needed to pay off debt to New York Community Bank and CitiBank, who are named defendants in the suit.
But Croman never closed on the loan and wanted different terms, the suit states. One of his attorneys, Andrew Albstein, informed Art Capital earlier this month, with Croman now in jail, that they would not be pursuing the loan anymore and that they had retained “Meridian Group” to find debt opportunities elsewhere. Art Capital said this stance put Croman in breach of contract and that he additionally owed $1.7 million in costs related to loan due diligence work, as required by the term sheet.
In December, New York Attorney General Eric Schneiderman announced an $8 million settlement owed by Croman in connection with a separate tenant harassment case against him, a development that had factored into the loan talks with Art Capital, according to the court complaint, because it complicated the matter as to whether Art Capital has the first-priority lien on Croman’s art and home.
Benjamin Brafman, an attorney for Croman, did not immediately respond to a request for comment. Nor did Albstein, Croman’s real estate attorney. Art Capital’s attorney, Francis Majorie, also did not immediately respond to a request....MORESome earlier fancy finance posts that may be of interest:
Carlyle and Banque Pictet Hook Up For Art Financing Action
What's the Scam? Why Did Deloitte Set Up Their Art & Finance Practice In Luxembourg?
Deloitte's Art and Finance Report 2014: Buying Art On Margin
The Art Finance Biz Seems Quite Robust: "Sotheby’s Adds Another $200 Million to Credit Facility for Guarantees"
Finance and Art: "When the Caravaggio No One Thinks Is a Caravaggio Becomes the Basis of an Asset Swap"
Big Money: "An Auction House Learns the Art of Shadow Banking"
Big Money: "An Auction House Learns the Art of Shadow Banking"
In "Liechtenstein Is Using One of the World's Finest Art Collections to Market Its Private Bank to the Chinese" I took the not-too-controversial position that "'Prince of Liechtenstein' is a very good gig."
I'm thinking that Grand Duke of Luxembourg ain't too shabby either.
