Biggest Marina Developer Files for Bankruptcy : Finances: Abraham M. Lurie seeks court protection as he battles his Saudi partners for control of his extensive holdings.
Marina del Rey’s biggest developer, Abraham M. Lurie, has filed for personal bankruptcy in the midst of a pitched battle with his Saudi Arabian partners for control of his extensive Marina holdings.
Lurie sought Chapter 11 protection in federal bankruptcy court in Los Angeles late Tuesday as mounting legal and financial pressures threatened to sink his Marina holdings, including three hotels, two apartment complexes, shopping centers, offices, restaurants, more than 1,000 boat slips and the last undeveloped piece of waterfront land in Marina del Rey.
All of the businesses operate on public land through 60-year leases with Los Angeles County. Together, Lurie’s properties make up nearly one-fifth of the entire Marina.
The bankruptcy filing is the latest in a series of legal maneuvers by Lurie to protect his personal assets at a time when he is being sued by his Saudi Arabian partners, his ex-wife and former real estate brokers and is in default on more than $50 million in loans from four banks.
Under federal bankruptcy law, a Chapter 11 filing allows the petitioner to restructure his debts while retaining control of his assets.
In a statement Wednesday, Lurie said the filing was necessary because his Saudi associates “have been trying to squeeze me out of this partnership” for the past year. The statement echoed remarks Lurie had made last week to Los Angeles Superior Court Judge Eric E. Younger at a hearing dealing with the suit filed against him by the Saudis.
Lurie’s partnership with the Saudis began in August, 1989, when he sold a 49.9% interest in his Marina holdings to then-unidentified foreign investors in a secrecy-shrouded deal that encompassed a dozen corporations in Europe, the Caribbean and California. The carefully constructed deal was approved by the Los Angeles County Board of Supervisors without county officials learning the identity of the investors.
The Times subsequently identified the lead investor as Saudi billionaire Abdul Aziz Al-Ibrahim, a brother-in-law of King Fahd, the Saudi ruler. The Marina properties are part of an extensive portfolio of real estate in the United States held by Ibrahim and his partners. Those properties include the Ritz-Carlton Hotels in New York, Washington and Houston, a Ritz-Carlton under construction in Aspen, Colo., a high-rise office complex near Chicago-O’Hare International Airport, and other properties in Rochester, Minn., and Florida.
Ibrahim and his brother Khalid have been identified by Fortune magazine and several British publications as brokers in Saudi Arabia’s multibillion-dollar purchases of Boeing 747 jetliners and British Tornado fighter bombers.
Last fall, Lurie and the Saudis announced they had reached a tentative agreement for the foreign investors to buy out Lurie’s remaining 50.1% interest in the Marina leaseholds. But amid bitter wrangling between the partners, the deal soon began to unravel, and the Saudis filed suit in March seeking to dissolve their partnership with Lurie.
The Saudis accused Lurie of engaging in “fraud and abuse,” including diverting funds and failing to provide accounting and financial records. They asked the court to give them control of the Marina properties.
In recent weeks, Lurie fought back, accusing his partners of cutting off funds to the partnership and forcing Lurie and the partnership, Marina International Properties Ltd., to the brink of financial ruin.
Pressed by both sides, Judge Younger last Friday appointed a retired judge as receiver to oversee the Marina properties but left open his exact powers.
Lurie wants the court to authorize the sale of some of his Marina leaseholds to satisfy the banks without his Saudi partners’ approval. Although the county owns the land at the Marina, the long-term leases can be bought and sold much like conventional real estate.
Lurie’s Marina properties include the Marina Beach, Marina International and Marina del Rey hotels, the Admiralty and Islander apartments, Fisherman’s Village, Pier 44, Marina Beach Shopping Center and Marina West office complex. The portfolio also includes a choice 3.7-acre waterfront site that has stood vacant since Lurie obtained the lease 23 years ago.
Altogether, Lurie and his company, Real Property Management Inc., owe Los Angeles County more than $5 million in deferred rent on the vacant land and the high-rise Marina Beach Hotel. Real Property Management was not included in the bankruptcy petition.
Ted Reed, director of the county’s Department of Beach and Harbors, said Wednesday he was concerned about the impact the bankruptcy filing could have on efforts to force Lurie and his partners to build on the vacant land.
“If push comes to shove, we would do all right,” Reed said, because the county still owns the underlying land.
County officials, however, have been concerned about the psychological impact that a Lurie bankruptcy or foreclosure could have on the entire marina.
“There is no doubt about it--he is a major player out here,” Reed said. But Reed added that he could not comment in detail about the significance of the bankruptcy filing until he consulted with the county’s lawyers to sort out the “legal gymnastics” of the matter.
Abraham M. Lurie, Marina del Rey’s biggest developer, entered into partnership with Saudi billionaire Abdul Aziz Al-Ibrahim and other investors in 1989, when he sold them a 49.9% interest in his Marina holdings. Last fall, Lurie and the Saudis announced they had reached a tentative agreement for the foreign investors to buy out Lurie’s remaining 50.1% interest in the Marina leaseholds. But amid bitter wrangling between the partners, the deal soon began to unravel, and Ibrahim and his associates sued Lurie early this year seeking to dissolve their partnership.