A court case playing out in New York details Aspen Valley Ranch owner Charif Souki’s frustrations with the lenders who are trying to push the property into foreclosure over an alleged debt of $88 million.
The introduction to Souki’s lawsuit against four lenders, which includes foreclosing party Wilmington Trust, summed up the disagreement like this: “This dispute arises out of the unconscionable, bad faith conduct of lenders who have repeatedly violated their duties under loan agreements and under New York law, causing significant harm to their borrower, Plaintiff Charif Souki.”
From there, the suit portrays Souki as the victim of a fraud engineered by lenders who forced him into a loan default through deceptive and misleading agreements, seized his sailboat called “Tango,” and sold shares he owned in a public company when they were at rock-bottom prices.
The suit was filed March 6 in the Supreme Court of the State of New York, County of New York: Commercial Division. Named as defendants were Nineteen77 Capital Solutions of New York, Bermudez Mutuari LTD of the Cayman Islands, Chicago-based UBS O’Connor LLC and Delaware-based Wilmington Trust National Association.
The lenders threatened to initiate foreclosure proceedings on Aspen Valley Ranch in mid-2022 but were spooked away by the financial commitment such an undertaking would demand, according to the suit.
“Defendants also knew that upon foreclosure, they would take on the substantial financial obligations associated with the operations and amenities of the Ranch,” the suit said. “Not surprisingly, Defendants never moved forward with foreclosure.”
On March 23, however, Wilmington Trust initiated foreclosure proceedings on the ranch through filings made in the Pitkin County Treasurer’s Office, which scheduled a foreclosure auction for July 26, according to public records. July 12 is the deadline for the owners of Aspen Valley Ranch — AVR AH LLC, Souki and their affiliates — to file a notice to cure the debt to avoid auction. As of Monday, the ranch owners had not made any filings in the foreclosure action.
Souki’s Aspen-based private investment company Ajax Holdings owns the real estate firm Coldwell Banker Mason Morse, which is not part of the legal or foreclosure actions.
According to Souki’s lawsuit in New York, he was loaned approximately $90 million from the defendants over 2017 and 2018. Souki in return pledged as collateral the ranch, his sailboat and 25 million shares of stock in Tellurian Inc., a natural gas company he co-founded in 2016.
Souki’s lenders, in 2019 and without Souki’s knowledge, loaned $60 million to Tellurian. Tellurian was not told about the loans to Souki, who was Tellurian’s board chairman at the time, the suit said.
“Other than making introductions, Souki was not involved in the negotiations of the Tellurian Loan,” said the suit, which argued the omission created a conflict of interest for the lenders because Tellurian and its stock would suffer financially if Souki defaulted on his loan.
As the Houston-based Tellurian was flirting with bankruptcy in 2020, the lenders “begged Souki to run Tellurian and ensure that Tellurian would repay its loan,” the suit said.
Tellurian paid off the entire loan in March 2021, the suit said. Ten days later, on March 22, the lenders “demanded immediate cash payments from Souki, threatened to foreclose on his ranch, and pressured him to sell his Tellurian stock in ways that would likely violate securities laws,” the suit said. “When Souki refused, Defendants began charging him a much higher interest rate, rejected Souki’s proposals to use third-party financing and sales of his ranch properties to reduce his debt, and refused to sell any of the Tellurian stock when it was trading at a historically high price.”
Aspen Valley Ranch also was listed for sale for $220 million, but the property didn’t move.
“To continue in his good faith efforts to pay down some or all of his debt, Souki pivoted to a strategy that included (a) marketing and selling the Ranch’s houses and undeveloped lots as separate properties, and (b) renting out the houses in the meantime in order to generate revenue that could be used to help cover the operating costs and potentially pay down some of the Loans. To execute this strategy, members of Souki’s family, who had lived in the Ranch houses for five years, moved off the Ranch in early 2021 and Souki’s broker began marketing the properties at market values,” the suit said.
Little to no headway was made in negotiations between Souki and the lenders, and in February the lenders forced the transfer of Souki’s 25 million shares in Tellurian.
“Defendants’ incompetence and unreasonableness turned into sheer recklessness in early February 2023. On February 6 and 7, Defendants forced a transfer of Souki’s Tellurian Shares from Souki’s account to theirs,” the suit said.
That month the lenders sold 8,837,798 shares for $15,431,502; shares were trading at $1.50 on Feb. 15, “a low point in the share price not seen since January of 2021,” the suit said.
The suit seeks a court judgment declaring the loans have been paid in full and Souki has no more debt to the lenders because they sold the shares at low-ball prices and disrupted Tellurian’s standing.
Aspen Valley Ranch is a gated area covering 800 acres with luxury homes.
The foreclosure action exempts two residential properties that sold in 2021, as well as two homestead lots, according to public filings. A limited liability called Beyond the Beach paid $31.5 million for a 4,700-square-foot home on the ranch’s 45-acre lot 8 in October 2021; Three Dolphins acquired lot 4, also with a home (5,069 square feet on 35 acres), for $15.5 million in August 2021.
