Lehman Brothers sued to foreclose on a stalled Manhattan condominium project, alleging developer Yitzchak Tessler failed to repay the $136.8 million senior mortgage.
Tessler bought the property at 1107 Broadway through a limited liability company in October 2007 for $235 million and filed plans to convert the 17-story building into condominiums, according to city records. The plan called for creating commercial space on the ground floor and adding eight stories to the building, located between 24th and 25th streets.
"Owner failed to pay the senior indebtedness on the maturity date and the full amount thereof remains due," Lehman, which filed for bankruptcy protection in September 2008, said in a complaint Tuesday in New York State Supreme Court in Manhattan.
New York development stalled last year as the city's unemployment rate surpassed 10%. Residential building permits fell 82% in 2009, with the number of units approved for construction in Manhattan dropping to 1,363 from about 9,700, according to the New York Building Congress.
In addition to the $136.8 million senior loan, Tessler owes $17 million in accrued interest, $10.6 million in default charges, a late fee of $6.84 million and about $7.5 million in other fees, according to the complaint.