Margaritaville: Margaritaville's overseas lenders claim developers are on the hook for $94M

Some South Korean investors have doubled down on their efforts to collect tens of millions of dollars in defaulted loans issued to Margaritaville hotel developer Sharif El-Gamal and his partners.Korean firm Global One Asset Management is asking a New York court to make El-Gamal and business partners Andrew and Stephen Weiss fork over $94 million for the Jimmy Buffett-inspired Midtown property, which the developers lost in a foreclosure suit in 2023 but which remains open.According to motions filed Thursday in Manhattan state Supreme Court, Global One, the private equity company that pooled the unnamed investors' funds into trusts, specifically seeks to recoup the $86 million it contributed to the project, through a pair of mezzanine level loans written in 2019, plus interest on the loans and legal fees, for a total of $94 million.It's the second push by Global One to collect the money. A previous try failed last year when Justice Melissa Crane dismissed the case on a technicality. Crane ruled in October that trusts created under Korean law essentially have no ability to sue in American courts and must instead be represented by an identifiable trustee, filings show.So this time around, Korean agriculture bank Nonghyup Bank has taken the reins on behalf of Global One and is acting as a third-party trustee.As before, the plaintiffs are asking a judge for a quick resolution by way of summary judgment, a maneuver that can allow a trial to be bypassed.Whether the tweaks to the legal move will reach a more favorable outcome is unclear. Secondary-level investors often have a harder time recouping funds from fizzled projects than do primary lenders.But the court fight serves as a reminder of the dramatic collapse of El-Gamal, the CEO of SoHo Properties, and his partners, the founders of Westchester County-based Flintlock Construction Services, in regards to the Margaritaville project, which is at West 40th Street.Opened in summer 2021 during an intense stretch of the pandemic, the 32-story, 234-room hotel at 560 Seventh Ave., which reportedly cost $370 million to develop, was beset by slow tourism, according to court filings. Two years later the development team began defaulting on loans tied to the property, which features a 30-foot tall version of the Statue of Liberty hoisting a colorful tropical cocktail and an outdoor heated pool.El-Gamal and his partners twice filed for Chapter 11 bankruptcy protection to hang on to the property. But they ended up losing the site to a different mezzanine lender, Philadelphia-based Arden Group, which bought the Times Square site in October 2023 through a foreclosure auction with a $1,000 credit bid.Meanwhile, the El-Gamal-led team is still in federal bankruptcy court trying to sort out the repayment of creditors behind Margaritaville's $151 million primary mortgage, a list that includes the synagogue Garment Center Congregation, which once stood on the property, records show.Joseph Czerniawski, the lawyer with Condon & Forsyth who represented the El-Gamal team in the previous case, declined to comment. And Marsha Indyck, the attorney with the firm Faegre Drinker who has handled the previous and new case on behalf of the lenders, also declined to comment.