page_title: 111 West 57th Street
section_title: AmBase lawsuits
hierarchical_section_title: 111 West 57th Street / History / AmBase lawsuits
caption_attribution_description: English: 111 West 57th Street under construction, looking north from 6th Avenue in New York City on July 19, 2019.
context_page_description: 111 West 57th Street, also known as the Steinway Tower, is an 84-story, 1,428-foot supertall residential skyscraper developed by developers JDS Development Group and Property Markets Group in Midtown Manhattan, New York City. Located along Billionaires' Row on 57th Street near Sixth Avenue, the development consists of the original landmarked Steinway Building designed in 1925 by Warren & Wetmore and a new tower by SHoP Architects.
  When completed, the tower will be one of the tallest buildings in the United States, as well as the thinnest skyscraper in the world with a width-to-height ratio of about 1:23 or 1:24. The north side of the tower rises directly up to the pinnacle of the building. On the south side of the tower, a series of setbacks appear as the tower rises, thinning out as the height of the building increases.
  Since beginning construction in early 2014, the development has faced significant challenges including union protests, multiple lawsuits from a former equity partner, a foreclosure, and the indictment of the project's general contractor for fraud, withholding wages, and using undocumented immigrant labor.
context_section_description: In the summer of 2017, after the tower had been built to 20 stories, construction stalled. According to a lawsuit filed by AmBase, an investor which had purchased a 59% stake in the building for $56 million in 2013, the developers neglected to account for cost overruns reaching $50 million in relation to renting construction cranes necessary for completing the skyscraper along with complications related to excavation. In order to cover the extra costs, the developers had issued six capital calls totaling $63.6 million. AmBase participated in the first four calls but not the last two, which resulted in their stake being diluted from 60.3% to 43.5%.
  In retaliation, AmBase filed a lawsuit seeking $105 million in damages which claimed that the capital calls were unnecessary and done only to dilute their stake for the benefit of developers Kevin Maloney and Michael Stern. AmBase also claimed that Atlantic 57 LLC, controlled by Arthur P. Becker and Andy Ruhan, did not participate in any of the capital calls yet did not have their 26% stake diluted at all. Additionally, since construction costs had allegedly risen by more than 10%, AmBase claimed their contract entitled them to full repayment of their $66 million investment along with 20% interest. However, the developers claimed that since there had never been an officially approved budget, there was no measure by which to determine cost overruns.
  Without the additional cash from AmBase, the developers fell into default on the $325 million mezzanine loan from Apollo. However, they managed to negotiate a forbearance agreement on $300 million of the debt and the remaining $25 million was sold to Spruce Capital Management. The developers also were in the process of negotiating another $100 million mezzanine loan from Baupost Group to repay Spruce but the loan was vetoed by AmBase. At the end of July 2017, Spruce claimed that it had not received payment on the $25 million mezzanine loan and filed paperwork to begin the process of foreclosure.
  AmBase filed another lawsuit, claiming that developers Kevin Maloney and Michael Stern were colluding with the lender to allow a foreclosure which would wipe out AmBase's $66 million equity investment while preserving Maloney's and Stern's $35 million stake. The lawsuit resulted in a temporary restraining order which halted the foreclosure process until the New York Supreme Court could issue a ruling on August 14. However, at the end of August the Court ruled that Spruce Capital could proceed with foreclosure, which allowed the lender to hand over the development entirely to Maloney and Stern, wiping out AmBase's investment completely. AmBase appealed the ruling but lost again in the New York Supreme Court, Appellate Division in January 2018.
  AmBase refiled their lawsuit in federal court in early 2018, claiming that Maloney and Stern's alleged collusion with Spruce violated the Racketeer Influenced and Corrupt Organizations Act and seeking a $136 million judgement. Despite the building's monetary and legal issues, a number of apartments in the tower had already gone to contract. However, AmBase and founder Richard Bianco faced their own lawsuit from hedge fund IsZo Capital, which claimed the company had purposefully forced the 2017 foreclosure by denying the Baupost Group loan. Following the foreclosure, Bianco had agreed to finance the lawsuit against Maloney and Stern in return for 30 to 45% of any payout from the lawsuit. According to IsZo, Bianco purposefully sabotaged efforts to prevent the 2017 foreclosure because he instead desired the personal payout from the lawsuit over whatever money AmBase could recover from preventing the foreclosure. In October 2018, AmBase's federal lawsuit was dismissed after the court found no evidence of collusion between Maloney, Stern, and Spruce. In September 2019, AmBase's appeal of the lawsuit was dismissed by the United States Court of Appeals for the Second Circuit.
caption: Front facade with pinnacle installation, looking north from 6th Avenue on July 19, 2019.
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