Wilmington Trust, National Association v. Aevri Salina Meadows LLC
1:23-cv-08824
S.D.N.Y.Nov 22, 2023Background
- In Feb. 2022 Bank of Montreal made a $25,000,000 loan to Aevri Salina Meadows LLC secured by the Salina Meadows Office Park; Moshe Rothman guaranteed the loan; Wilmington Trust acquired the loan by assignment.
- By Oct. 1, 2023 the loan balance was alleged to be at least $34,098,597.38; Plaintiff alleges multiple defaults including payment default (since at least Apr. 6, 2023), breaches of cash‑management (no deposits since Oct. 4, 2022), and failures to deliver required financial disclosures.
- Plaintiff alleges a sharp decline in the rent roll and property value (loan relied on a $41M appraisal; a recent broker opinion put value near $11M) and that two critical tenants vacated contrary to prior representations.
- The property manager threatened to abandon the site, creating an immediate risk of harm to the property and tenants.
- Wilmington Trust moved to appoint William C. Colucci as receiver; Aevri and Rothman did not timely oppose the urgent request.
- The Court found the defaults undisputed, imminent danger to the property, a high likelihood of Plaintiff’s success on the merits, and appointed Colucci as receiver (without prejudice to later challenge).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a receiver should be appointed under the mortgage upon defaults | Mortgage §8.1 authorizes appointment without notice on default; multiple defaults have occurred | No opposition / defendants did not appear | Court granted appointment; contractual clause strongly supports receivership |
| Whether there is imminent danger of diminution or injury to the property | Manager may abandon property; declining rents/value create imminent risk and irreparable harm | No opposition / not contested | Court found imminent danger and irreparable injury justifying immediate relief |
| Whether legal remedies are adequate and Plaintiff’s probability of success | Defaults are undisputed, so legal remedies alone are inadequate; high likelihood of success on foreclosure/guaranty claims | No opposition | Court concluded remedies inadequate and Plaintiff showed high probability of success |
| Whether the proposed receiver is suitable | Colucci has 35+ years’ experience in asset management/receiverships and is registered to serve | No opposition | Court approved William C. Colucci as receiver pending further court order |
Key Cases Cited
- Citibank, N.A. v. Nyland (CF8) Ltd., 839 F.2d 93 (2d Cir. 1988) (contractual receiver clause strongly supports appointment upon default)
- U.S. Bank Nat’l Ass’n v. Nesbitt Bellevue Prop. LLC, 866 F. Supp. 2d 247 (S.D.N.Y. 2012) (receiver is extraordinary relief; imminent danger of diminution is a critical factor)
- D.B. Zwirn Special Opportunities Fund, L.P. v. Tama Broad., Inc., 550 F. Supp. 2d 481 (S.D.N.Y. 2008) (existence of contractual receiver language is a factor favoring appointment)
- Rosen v. Siegel, 106 F.3d 28 (2d Cir. 1997) (appointment of a receiver is an extraordinary remedy to be used cautiously)
- Varsames v. Palazzolo, 96 F. Supp. 2d 361 (S.D.N.Y. 2000) (sets out factors for receivership: fraud, imminent danger, inadequacy of legal remedies, comparative harm, probable success/irreparable injury)