Richard Storfer attorney with Rice Pugatch Robinson Storfer & Cohen in Fort Lauderdale.
Fort Lauderdale-based Aero Toy Store sells luxury to jetsetters, but a lawsuit playing out in Broward Circuit Court suggests it used a low-down tactic to avoid paying its mortgage.
Litigation over the aircraft dealer's mortgage on a hangar at the city-owned Fort Lauderdale Executive Airport spawned claims the company sold assets at a deep discount to avoid repaying a $10 million real estate bill.
The case morphed into two pending actions: A multimillion-dollar foreclosure battle complicated by related claims of a fraudulent asset transfer, plus a bid for a declaratory judgment to prevent redevelopment that would shut down an airport access route. The litigation pits successor lender CPC Finance II LLC against a company linked to airport property manager Sheltair.
The suit also names the city as a defendant and Free Trade Ltd., an affiliate of Sheltair's predecessor, as a nominal party.
CPC Finance claims it purchased the debt on a mortgage to Aero Toy Store, which operated out of an industrial building at the airport. Aero had a long-term lease as a fixed-base operator, or FBO, providing flight services. CPC Finance said Aero defaulted on its mortgage, then maneuvered to avoid the consequences by reportedly selling about $15 million worth of assets for $2 million to Sheltair FXE Northside LLC.
CPC contends the sale was a fraudulent transfer to dodge creditors and give Sheltair greater control of the airport's FBO business.
"Sheltair's motive is to take over the FBO, which they've done," CPC Finance attorney Richard Storfer of Rice Pugatch Robinson Storfer & Cohen in Fort Lauderdale told the Daily Business Review.
Michael Moskowitz of Moskowitz Mandell Salim & Simowitz represents Sheltair FXE. He filed an objection to CPC's plan to subpoena Aero documents, arguing the financial discovery was premature and CPC had not proven it was entitled to the information. He obtained an extension giving Sheltair until June 2 to respond to CPC's initial discovery requests and interrogatories.
Sheltair is a major developer of aviation-related properties and operates 17 FBOs. The company developed nearly 3.5 million square feet of aviation space at 12 airports in Florida, Georgia and New York, according to court documents. It's been a tenant for nearly 40 years at Fort Lauderdale Executive Airport, where it holds eight city leases.
As Aero's successor, it moved to take over a long-term city lease and promised the city a $25 million investment to redevelop the site, build on two neighboring parcels, attract large national tenants and create jobs with average salaries around $75,000.
CBRE Inc. sent a letter of intent to the airport manager with a cover showing Sheltair Aviation planned to create 158,000 square feet of hangar space in eight buildings, 32,000 square feet of office and retail space and a 9,500-square-foot terminal with aircraft parking aprons, taxiways and parking lots.
"Sheltair currently has tenants, such as Banyan and BurgerFi, lined up to lease space once their new hangars are constructed," according to the CBRE memo filed as a court exhibit. "Additionally BurgerFi will be relocating their corporate headquarters from North Palm Beach to Fort Lauderdale."
Based on Sheltair's promise of a substantial financial outlaw, the city awarded the company a 30-year lease in November.
But CPC Finance suggests the underlying deal was a ruse and asked Broward Circuit Judge Jack Tuter to wipe out the transaction and provide declaratory and injunctive relief. The lawsuit contends Sheltair never intended to pay the mortgage or bring in major tenants.
"Aero Toy Store had a very valuable operation at the airport that Sheltair is now the beneficiary of," Storfer said. "The point is there will be a significant deficiency owed to my client, and Aero will have no means to pay it because they've sold off all their assets."
CPC Finance claims it will suffer if the redevelopment plans move forward, claiming Aero affiliate Free Trade Ltd. controls a taxiway on city land that serves as the main access to the former Aero hangar. Sheltair's proposal would close that access point, devaluing the former Aero hangar, CPC argues.
A hearing on motions from Sheltair and the city to dismiss the case is set for June 15.
Edward Dion of Nabors Giblin & Nickerson in Fort Lauderdale represents the city, and Jacob Horowitz of Goren Cherof Doody & Ezrol represents Free Trade Ltd.
Original article can be found here: http://www.dailybusinessreview.com