The court approves the sale of The One villa to Richard Saghian
Fashion Nova founder Richard Saghian’s $141 million bid for the Bel Air megamansion known as “The One” was approved by a US Bankruptcy Court judge on Monday.
Judge Deborah Saltzman’s ruling followed a two-day court hearing at which creditors opposed to the sale claimed Saghian’s bid should be deemed inadequate because the three-day auction for the sprawling estate came within a week of Russia’s invasion of Ukraine took place and deterred bidders.
Attorneys for Saghian, the bankrupt estate, and other creditors — who acknowledged the offer was disappointing but nonetheless supported it — countered that there were other key reasons why the offer fell at half of the home’s $295 million bid was received. They further argued that if another auction were held in months, there was no guarantee that the geopolitical situation in the world would improve.
Saltzman said that while the “proposed sale doesn’t feel like a success to anyone except perhaps the proposed buyer,” she decided it met all of the legal criteria for approval. She also said she would not make her own judgment as to whether an auction not held under the cloud of war would have yielded a better result.
“I think there are credible arguments on both sides,” she said.
The 105,000-square-foot marble and glass home on a Bel-Air hilltop remains unfinished and owes more than $250 million. Saghian’s $126 million bid, which totaled $141 million after auction fees, means many creditors are facing significant and even total losses for the home, which has been under construction for nearly a decade.
The trophy house’s successful bid was a mega disappointment, as it failed to break California’s record, set in October by venture capitalist Marc Andreessen, who bought a $177 million Malibu estate. It was also well below the $238 million a hedge fund mogul spent in 2019 on a penthouse overlooking New York’s Central Park, the US high-water mark.
Saghian was one of only five participants in an online auction that began on February 28th and ended on March 3rd. The home’s developer, Nile Niami, who claims he owes around $44 million in loans on the project, had hoped to put together a last-minute $250 million offer, but that came didn’t materialize, leaving only the fashion mogul’s offer on the table.
Saltzman told creditors on Friday that she would weigh the decision based on case law, which would allow her to quash Saghian’s bid if it were to prove “grossly inadequate.”
Creditors seeking to reverse the offer noted that Crestlloyd, the bankrupt limited liability company that owns The One, had indicated in court filings that the property was worth $325 million. They also highlighted a 2019 appraisal conducted during construction that valued the property at $228 million.
They also noted that the online sale, conducted by luxury home auction house Concierge Auctions, attracted few bidders.
“It can’t be that the fear of this war and with the potential for World War III… didn’t have an impact [the] Bidding process,” Niami’s attorney Hamid Rafatjoo told the judge on Friday.
A lawyer for creditor Inferno Investments, which has filed about $31 million in claims against the estate, argued that even if the war continued in a few months, bidders would be prepared by then.
Supporters of the sale said that Crestlloyd’s estimate of the property’s value and the 2019 estimate were unrealistic and holding another auction could result in a lower bid. And they said the five bidders matched the concierge’s expectations. Saghian’s attorney informed the judge that his client may not participate in a second round.
Sale advocates also pointed out that no other genuine bids had come in in the weeks since the auction, although Crestlloyd had said it would entertain them. In additional arguments Monday, two of the attorneys also questioned why critics of the sale hadn’t filed their own emergency petitions to postpone the auction if they were so concerned.
“It’s all speculation as to what happens tomorrow, next week. World War III is two months away and we’ve been at it for God knows how long,” Hankey Capital’s attorney Thomas Geher argued Friday.
Hankey Capital, the real estate lending arm of Los Angeles billionaire Don Hankey, has lent the project more than $100 million, but ranks first among lenders to be repaid, though it may not be repaid in full.
Proponents of the bid argued that enthusiasm for what would be by far the largest home in Los Angeles, and possibly the largest new home in the country, was really dampened because it is unfinished and lacks an occupancy certificate.
Additionally, obtaining the certificate that would allow the new owner to move in could be a tedious process, they said.
Before The One filed for bankruptcy last year, Niami defaulted on about $106 million in home loans from Hankey, who foreclosed on the property and placed it under receivership. Allegations were made during state court that the home had design flaws and violated various zoning codes.
During Friday’s court hearing, house brokers and Concierge Auctions President Chad Roffers testified that some ultra-wealthy would-be buyers were put off by the challenges.
Roffers said concerns from neighbors — including the Bel-Air Assn. – were of particular concern. This homeowner group, which The One has called a “growing scandal,” was implicated in owning an illegally built Bel Air mansion through developer Mohamed Hadid tore off.
Roffer’s testimony also appeared to bolster allegations of design flaws, saying the mansion suffered significant damage during December’s record rainfall, forcing Crestlloyd to make repairs so it could be shown to potential bidders.
It also emerged during the hearing that the Los Angeles Department of Building and Safety recently conducted an inspection and claimed the mansion exceeded its approved height, which would force any owner to reduce it or request a variance.
Saghian’s attorney Sam Newman said Friday that since the auction, his client has realized the situation is more complex than he realized and it’s unclear how much money will need to be spent for the fashion mogul to move in.
“I am grateful that Judge Saltzman approved my offer and I look forward to working with the City of Los Angeles, the Bel-Air Association, my new neighbors and my design team to complete and perfect this iconic property,” said Saghian in a Post-Judgment Written Opinion.
Recently classified as a billionaire by Forbes, Saghian already owns two homes in the area, one in the Hollywood Hills that he bought for $17.5 million in 2018 and another on a beach in Malibu that he bought for $14.7 million last year. bought dollars. The hillside home was designed by Paul McClean, the same architect who designed The One.
Niami is a former film producer who has developed many trophy houses over the past decade but has seen sales decline in recent years. He considered The One the pinnacle of his building career and had hoped to one day sell the mansion for $500 million, although many viewed the price as a marketing ploy.
However, there is little doubt that the 21-bedroom, 42-bathroom property is exceptional. It features a 4,000-square-foot guest house, servants’ quarters, a moat and multiple pools, a wellness spa, a beauty salon, a four-lane bowling alley, and a multiplex movie theater, to name a few of its luxurious amenities.
The bid price of $141 million will leave the estate with proceeds of $138 million once they receive negotiated rebates from the 12 percent auction fee. The next step will be to distribute any proceeds, although Saltzman has made some initial decisions, including paying the real estate commissions. She said it was clear the agents had done their job of selling the property.