A bankruptcy judge installed a chapter 11 trustee to oversee the bankrupt Williamsburg Hotel, wresting control from its owner-developers after finding they had used the Brooklyn property’s funds on other unrelated investments, WSJ Pro Bankruptcy reported. Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., ruled after a three-day trial that developers Toby Moskovits and Michael Lichtenstein can’t be trusted to continue running the hotel operation and that an independent trustee should be installed to protect the business and its creditors. Mortgage lender Benefit Street Partners LLC had requested the appointment of a trustee in the bankruptcy case of the 147-room hotel, following reports by a court-appointed examiner that Ms. Moskovits and Mr. Lichtenstein siphoned off cash from the business, which they deny. The judge’s ruling snarls the developers’ efforts to end the hotel’s bankruptcy by restructuring its mortgage debt and pumping in $11 million in capital to retain their ownership interests. Benefit Street has argued for a sale of the hotel based in part on allegations that Ms. Moskovits and Mr. Lichtenstein had diverted revenue from the hotel to a related management company and other affiliated entities they controlled.
