99 Sutton wants lender’s lawsuit against guarantor to be paused

By Sarah Lizee

Olympia, Wash., April 7 – 99 Sutton LLC filed an adversary proceeding against 99 Sutton Lender LLC, according to court documents filed Wednesday with the U.S. Bankruptcy Court for the Eastern District of New York.

The complaint seeks to pause the prosecution of a civil action between 99 Sutton Lender and the debtor’s guarantor, Joseph Torres, which is currently pending in the U.S. District Court for the Eastern District of New York. The lawsuit involves claims brought by 99 Sutton Lender against Torres for amounts due under two guarantees in connection with a $19.5 million note and loan agreement between 99 Sutton Lender and the debtor.

The debtor said the continued prosecution will cause irreparable harm by preventing Torres from refinancing any of his properties, which is needed to complete a successful reorganization in the debtor’s Chapter 11 case.

99 Sutton said it will also cause a fire sale liquidation of Torres’ assets and, as such, hinder the debtor’s reorganization efforts.

The lawsuit also prevents the debtor and other interested parties from challenging 99 Sutton Lender’s claim, and it gives rise to a claim by Torres against the debtor that would have an adverse impact on the property of the estate.

“Extension of the automatic stay and/or the entry of an injunction enjoining the guarantee action until the effective date of a plan of reorganization or further order of this court is necessary,” the debtor said in court documents.

The Brooklyn, N.Y.-based property owner filed Chapter 11 bankruptcy on Dec. 20 under case number 21-43124.

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