Though Fashion Nova founder Richard Saghian’s $141-million offer for the mega-mansion known as The One was the high bid at a bankruptcy auction this month, it may not be enough to close the deal.
The event was held within a week of Russia’s invasion of Ukraine, and creditors disappointed that the winning bid was less than half the home’s $295-million list price are asking U.S. Bankruptcy Court Judge Deborah Saltzman for a do-over.
“It cannot be that the fear of this war and with the potential for World War III … did not impact [the] bidding auction process,” said Hamid Rafatjoo, the attorney for The One’s developer Nile Niami, at a Friday hearing. “That war scared everyone.”
Niami, who claims he is owed $44.4 million in loans made to the project, had hoped to assemble a last-minute $250-million offer for the home he considers the culmination of his development career, but that fell apart.
Saltzman had been expected to make a decision Friday on whether to approve Saghian’s $126-million bid, which totaled $141 million with auction fees. But like most everything else associated with the 105,000-square-foot Bel-Air estate — still unfinished after nearly a decade of construction — things went slower than anticipated. What participants thought would be a short hearing morphed to more than five hours of argument and testimony from attorneys, the home’s brokers, Saghian and others.
Saltzman, who cited case law that might allow her to set aside a bid if it were deemed “grossly inadequate,” said there was too much on the line for her to make a decision on the spot and instead scheduled closing arguments for Monday, when she promised a decision.
“There’s been a lot of law discussed. There’s been a lot of facts discussed. I do need some time to think,” she said.
The online auction opened Feb. 28, just four days after Russian forces invaded Ukraine, shocking the world while disrupting stock and currency markets. It closed March 3, as Russia’s offensive raged on.
On one side are Saghian, property owner Crestlloyd, a handful of creditors and others who would benefit from closing the deal — and who say the war is far from the only reason the mansion fetched such a low price. On the other are additional creditors, a couple of which could lose $10 million or more apiece and want a chance on a second auction. The home carries claimed debts that top $250 million.
Attorneys for the creditors that oppose the sale have alleged irregularities in the bid procedures and made other legal arguments, but seemed to view the Russian invasion as their trump card, even if they conceded it was unlikely the conflict would end anytime soon.
Kyra Andrassy, an attorney for Inferno Investment, which has lodged about $31 million in claims against the estate, compared the war to the outbreak of COVID-19, arguing that while the world was stunned in the early days of the pandemic, people eventually learned to live with it.
“Things tend to normalize,” she told Saltzman. “I think people adjust.”
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