The Battery Park City Authority (BCPA) is suing the operators of the now-shuttered bar and restaurant at Pier A for more than $8 million. The legal action seeks a combination of unpaid rent, interest, and rent that would otherwise have been collected—if the restaurant had not ceased operations, and if it had not been given earlier concessions on its rent by the Authority.
In legal documents reviewed by the Broadsheet, the Authority argues that “tenant has defaulted under the terms of the Lease by its failure to make payment of Base Rent and License Fees in accordance with the terms of the Lease, in an amount of at least $4,197,817.49,” and that interest on the unpaid rent comes to $409,906.26. The BPCA further alleges that “tenant is liable to plaintiff for payment of Rent that would have been payable by Tenant under the Lease… in the amount of at least an additional $3,955,683.25” All of these claims total slightly more than $8.6 million.
In series of replies filed with the New York State Supreme Court, the former operators of Pier A answer that “defendants deny the allegations” about unpaid rent, interest owed, and the demand for rent that would otherwise have been collectible by the BPCA.
In a further series of arguments, the BPCA seeks to enforce these claims not only against a corporate shell company that once operated the facility, Pier A Battery Park Associates, but also aims to hold personally liable the investors behind it—restaurant impresarios Peter Poulakakos and Paul Lamas. The same suit additionally seeks to extract damages from a Tribeca-based firm, New York City Waterfront Development Fund II, which lent money in 2011 to the company operated by Mr. Poulakakos and Mr. Lamas, after they offered their lease on the space (which is rented from the BPCA) as collateral.
In a separate legal action, Waterfront Development Fund II last November sued Mr. Poulakakos and Mr. Lamas, seeking the return of $16.5 million (the original amount of the 2011 loan), along with $2.63 million in accrued interest, plus attorney’s fees and court costs. That suit alleged that the borrowers “used a fraudulent scheme to squeeze out of the Project all the fees and distributions for themselves that they could before shutting the doors.”
The complaint filed by the lenders charged, “in order to induce Plaintiff to make the Loan, Borrower fraudulently lured Plaintiff with representations and financial pro formas that affirmatively demonstrated Borrower’s ability and commitment to timely pay back the Loan. It was only years later, after Borrower walked away from the Loan entirely, that Plaintiff learned that the whole project was undercapitalized from the beginning.”
The same filing asserted, “when Borrower eventually began defaulting under the Lease and the Loan Agreement, [it] made one false promise after another in order to prevent Plaintiff from enforcing its remedies under the Loan Documents and the Guaranty. They claimed, among other things, that operational changes were underway that would cut expenses and increase revenues, that they were obtaining additional financing, and that Defendants were ‘committed’ to ‘reducing [their] ownership percentage … to make room for a new equity investor.’”
“None of that was true,” the court documents continued. “Instead, as of January 2020, the Borrower had stopped making interest payments due to the Lender under the Loan Agreement, or payments owed to BPCA under the Lease. Then in August 2020, it tendered the keys to Pier A to BPCA, purporting to surrender its leasehold interest (although BPCA disputes the ‘surrender’) and walking away from the Loan entirely.”
The disputed “surrender” of the premises also figures prominently in the BPCA’s suit against the operators. In effect, the Authority is asking the court to rule that when Pier A Battery Park Associates unilaterally handed back the keys to the building, in August, 2020 (at the height of the pandemic), this move did not exempt them from any of the financial obligations contained in their lease, that these obligations have continued to accumulate in the 28 months since, and will continue to accrue until a judge rules that the lease has been nullified.