Delshah's $58M Deal a Clever Maneuver, Secures 55 Gansevoort's Future

Two months ago, Delshah Capital found itself in a tight spot when a deal to sell a Meatpacking District building fell through. This unforeseen twist pushed them into technical default on a $59 million Israeli debt offering linked to the property. However, a lifeline emerged as Michael Shah's firm successfully secured a buyer for the property, and it's none other than Restoration Hardware. In a prepackaged bankruptcy filing on Monday, it was revealed that Restoration Hardware has entered into a contract to acquire 55 Gansevoort Street, which is home to their boutique hotel, RH Guesthouse. The purchase is set at approximately $58 million. This sale, combined with another strategic deal, is expected to generate the necessary cash for Delshah to clear the bond debt before the looming deadline.

A Bondholder-Friendly Approach

A Race Against Time

Originally, the bonds were scheduled to mature on September 30. Anticipating this maturity date, Delshah Capital had inked a deal in the spring to offload 55 Gansevoort. Unfortunately, the buyer withdrew from the agreement, leading to a bond rating downgrade and a subsequent technical default. To buy some crucial time and alleviate concerns among bondholders, Delshah devised a plan. Not far from Gansevoort, the firm had already entered into a contract to sell 100 Christopher Street to Lions Group for $30 million. Delshah proposed to use the proceeds from that sale to repay bondholders and expedite the process via a prepackaged bankruptcy filing. Bondholders accepted this solution, extending the maturity date of the bonds to December 31. This extension provided Delshah the necessary time to finalize the sale of 100 Christopher, find a buyer for 55 Gansevoort, and repay the debt.

Bondholders Approve the Plan

A Smart Strategy

Bondholders agreed to Delshah's plan, which included the prepackaged bankruptcy for 55 Gansevoort. The deal with Restoration Hardware is slated to conclude by December 1, as per the bankruptcy filing. Restoration Hardware has not yet provided a comment on the matter. While the $58 million sale price is 17 percent below the $70 million asking price from a July marketing post by Meridian Investment Sales, Shah is confident that this deal will leave Delshah with surplus funds after settling the bonds. As of Monday, the debt offering was valued at $55 million, according to bankruptcy records.

In this high-stakes financial maneuver, Delshah Capital has demonstrated its ability to navigate challenges effectively, securing the future of 55 Gansevoort and the financial well-being of its bondholders. With a strategic approach, they have emerged from a complex situation with a promising outcome.