Mohamed Hadid has settled a lawsuit against developer Zach Vella in relation to a partially built Beverly Crest mansion that was once listed for sale at $250 million.
In September 2022, Hadid, through an entity called Treetop Development, sued Vella’s Skylark Capital for perpetrating a “loan-to-own scheme” on 9650 Cedarbrook Drive, a planned 78,000-square-foot home that’s reportedly the largest-ever permitted residential development in Los Angeles. Beverly Crest is a section of L.A. overlooking Beverly Hills.
The dispute related to a $92.8 million mortgage on the mansion property. In a complaint filed in California’s Central District bankruptcy court, Hadid claimed that Vella only provided a $29 million chunk of the promised figure. “This in turn led to the construction project not being timely completed and Treetop unable to timely pay the subcontractors performing the work,” the complaint states.
On April 23, Hadid filed a motion asking a judge to approve the settlement, court records show. Treetop agreed to the deal with Skylark Capital’s servicer, Skylark (UK) Servicing LLC.
“The parties have now reached an agreement that consensually addresses their various disputes, will facilitate a sale and potential plan process, and maximize the value of the debtor’s property which will serve to benefit the debtor’s estate and all of its creditors,” the court filing reads.
Under the terms of the agreement, Hadid will sell the property on an “as is where is” basis with the possibility that Skylark itself will lodge a bid for the 37-acre site.
The deal sets Skylark’s secured claim at $40 million. The figure is much lower than the $63 million that Vella claimed at the time the lawsuit was filed. The agreement also extends the maturity date and increases the debtor-in-possession financing on the property to $16.6 million.
In its motion, Hadid’s counsel said that the embattled developer may not be able to afford a long legal fight.
“The costs of discovery, expert testimony and trial would be very costly and time intensive, and would likely involve multiple trial days. Additionally, the debtor may not have the resources to fully pursue a final judgment against the Skylark parties,” the court filing states.
A possible wrinkle in the deal is the intervention of the City of Los Angeles. In January, Hadid sued the city for canceling the building permits for the site. The court issued an order that reinstated the building permits for the site. In an objection to the settlement, the city claimed that the settlement should not be approved because it would give Hadid more resources to sue taxpayers.
“The settlement funds further litigation over the issue and also enables the expansion of litigation into other areas that seek damages against city taxpayers. Even if the settlement would lead to payment in full to all creditors, the settlement does nothing but drive the parties further into two camps: the City of Los Angeles versus virtually everyone else,” the city’s filing reads.
The city has since appealed the decision, with hearings set for May 6 and May 10, court records show. Hadid could not be reached for comment.
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