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Real Estate Exec Charles Cohen Faces Legal Battle with Fortress Investment Group Over Massive Debt

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Edited by: TJVNews.com

Charles Cohen, a prominent real estate executive and owner of Cohen Brothers Realty, is embroiled in a high-stakes legal battle with Fortress Investment Group. The dispute centers around a $544 million lawsuit filed by Fortress, alleging that Cohen defaulted on debt tied to seven properties, including the Design Center of the Americas (DCOTA) in Dania Beach, Florida, according to an April 27th report on the businessofhome.com web site. This lawsuit comes on the heels of Cohen Brothers’ delinquency on $635 million in loans backed by its New York properties, including the renowned Decoration & Design Building (D&D Building), pushing the company’s total debt to at least $966 million. The report also indicated that Cohen, however, is fighting back with a new affidavit seeking to dismiss the lawsuit, claiming an agreement with Fortress to defer payments and extend the loan term.

According to Crain’s New York Business, Cohen claims that an agreement was reached with Fortress Investment Group in December, which included deferring payments and extending the loan term through the third quarter of 2025, the businessofhome.com reported. As part of this alleged agreement, Cohen agreed to put up 49 percent of his interest in the D&D Building and the Manhattan office building at 3 Park Avenue as collateral.

The purported agreement with Fortress Investment Group is crucial to Cohen’s defense. Cohen asserts that the terms of this agreement should nullify the basis of Fortress’s lawsuit. The report on the businessofhome.com said that the agreement, as described by Cohen, involves:

Deferred Payments: Fortress agreed to defer the loan payments, providing Cohen Brothers Realty with temporary financial relief.

Extended Loan Term: The loan term was extended to the third quarter of 2025, allowing more time for Cohen Brothers to stabilize its finances and meet its obligations.

Collateral Commitment: Cohen pledged 49 percent of his interest in the D&D Building and 3 Park Avenue as collateral, demonstrating a commitment to secure the loan extension and deferral agreement.

Cohen alleges that Fortress’s abrupt withdrawal from the agreement and subsequent demands were made in bad faith. According to the information provided on the businessofhome.com web site, he has argued that the lender’s actions were designed to manufacture a default, enabling Fortress to sue him personally, given that he had guaranteed the loan. Cohen described Fortress’s behavior as a strategic move to create a default scenario, thus justifying the lawsuit.

In his affidavit, Cohen asserts that Fortress’s actions provide sufficient grounds for dismissing the lawsuit and denying the firm’s motion for summary judgment. He argued that the last-minute change in terms and the demand for immediate payment were clear indications of bad faith. The report added that by allegedly orchestrating a default, Fortress aimed to leverage Cohen’s personal guarantee of the loan, putting his financial interests at significant risk.

Cohen further accuses Fortress of attempting to inflict additional harm on his business. According to the information contained in the businessofhome.com report, he claims that Fortress filed unredacted copies of the loan agreement with its lawsuit, disclosing sensitive information about tenants in Cohen Brothers buildings.

Cohen contends that the disclosure of this confidential information will likely cause more than $1 billion in damages to his company’s real estate portfolio. Indicated in the report was that he views Fortress’s actions as a deliberate attempt to undermine his business by creating opportunities for competitors to lure away tenants, thereby destabilizing his property holdings.

The legal battle between Cohen and Fortress highlights several critical issues within the real estate industry, particularly concerning the dynamics between large-scale borrowers and lenders. If Cohen’s allegations of bad faith and business sabotage hold, it could set a precedent for how similar disputes are handled in the future. The case underscores the importance of clear, enforceable agreements and the potential consequences of breaching such agreements.

Moreover, the situation raises questions about the ethical responsibilities of investment firms when handling sensitive information. The alleged disclosure of tenant details by Fortress could have far-reaching implications for how confidential information is managed and protected in legal disputes.

 

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