VIZZDA—February 14th, 2013 — Jerry Ayoub of Five Star Development, LLC and iStar Financial—represented by its Senior Vice President, David Sotolov—have filed a settlement agreement with the US District Court for the Southern District of New York, resolving their longstanding dispute. The settlement includes an amended and restated carve-out guaranty, which absolves Mr. Ayoub of personal liability contingent on satisfaction of the terms of the Settlement.
Per the terms of the agreement, Five Star Development forfeits a $13.3m letter of credit currently in escrow and must pay an unspecified amount to iStar by July 22nd, 2013 or face monthly escalations of the settlement payment amount. iStar cannot initiate foreclosure proceedings on the property until after the settlement termination date. Additionally, the amount of collateral secured under the agreement was expanded to include the portion of land acquired by Mr. Ayoub over the course of the suit.
The suit—as well as four others in various stages of adjudication between Mr. Ayoub and iStar Financial—stems from an $112,025,000 credit facility established between Five Star Resort Development, LLC as borrower and iStar RC Paradise Valley, LLC as lender. Both Mr. Ayoub and iStar contend that the other party was in breach of the loan agreement. The unpaid principle balance on the loan is stipulated to be no less than $71,480,243. This settlement resolves all outstanding legal action between these parties.
The planned development was to include a 225-room Ritz Carlton-branded hotel, luxury condominiums, single-family residences and a retail center. It sits on approximately 120 acres at the northeast corner of Mockingbird Lane and Lincoln Drive in Paradise Valley. While Mr. Ayoub is free to pursue entitlement action on the property, the project will not go forward as originally envisioned due to time constraints placed on the site by Ritz Carlton and the Town of Paradise Valley.
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