The Williamsburg Hotel went on trial in bankruptcy court as a top lender tries to install a chapter 11 trustee to oversee the bankrupt Brooklyn, N.Y., property, arguing the owner-developers running the business can’t be trusted, WSJ Pro Bankruptcy reported. Mortgage lender Benefit Street Partners LLC is seeking to appoint an independent trustee at the 147-room hotel following reports by a court-appointed examiner that its developers, Toby Moskovits and Michael Lichtenstein, siphoned off cash from the business, which they deny. The lender has questioned the movement of money between the hotel holding company 96 Wythe Acquisition LLC, a separate management company controlled by the developers and other affiliated entities. At trial on Tuesday in the U.S. Bankruptcy Court in White Plains, N.Y., the hotel’s director of finance, Jeremy Rauch, testified that his accounting team kept track of numerous fund transfers among those entities by using another affiliate called Northside Management LLC as a “clearing entity.” The developers often moved around funds as “lines of credit,” according to Mr. Rauch. And even though the transactions weren’t documented, Mr. Rauch said he was able to reconcile them by using the Northside account records. “They were trying to keep the hotel afloat. They’re trying to put in whatever was necessary to get the hotel running and operating,” Mr. Rauch said. “It was just whatever it takes to make it happen.” Mr. Rauch agreed when Judge Robert Drain, who is overseeing the chapter 11 case, asked if the developers moved the money around because they thought “it was all in the family.”
