Last week the landlord’s lawyer, David Rosner, served an eviction notice on LTCM, seeking to oust the firm from its tony quarters at Osprey House in downtown Greenwich, Conn. Talk about comedowns. Last fall LTCM, a firm featuring “Masters of the Universe” traders and Nobel laureates, was playing high-stakes financial poker with 15 of the world’s biggest financial institutions in the offices of the New York Federal Reserve Bank. Now the Masters of the Universe are being summoned to somewhat less august environs: housing court. To think of it is to giggle.
For LTCM, everything, it seems, is an opportunity for making things complicated. Witness this dispute, involving less than $3 million, penny ante for people who regularly trade billions. Here’s what’s going on. LTCM, which is not only Osprey House’s sole tenant but also its mortgage holder, hasn’t paid a penny of its $1.5 million annual rent since moving into the building in 1997. Its less-than-convincing explanation: the landlord never fixed a water leak in the basement, and hence no rent was due. Rosner says LTCM is misreading the lease and has stopped the landlord from making the repairs. But whatever shortcomings Osprey House may have, LTCM has managed to inhabit the place. Rent-free.
The landlord, who has taken a bath on the building since buying it 10 years ago, put it into bankruptcy in 1995. He wants to salvage his investment. His latest step: hiring Rosner’s firm, Kasowitz, Benson, Torres <&> Friedman, best known for helping Carl Icahn beat Ronald Perelman in the Marvel Comics bankruptcy. One of Rosner’s first steps was trying to expand the dispute from bankruptcy court to housing court. A second step involved the court of public opinion: as witness this story. (An aside: this dispute involves the management firm that runs the LTCM hedge fund, not the hedge fund itself. The fund seems to be doing OK lately, to the point that the rescuers may take some of their money out by the year-end.)
Back to the main event. Normally, landlords have tenants by the short ones, as bankruptcy types say. This time the tenant has the landlord. That’s because LTCM is not only Osprey House’s sole tenant, but also bought its mortgage to get approvals it needed for its lease to take effect.
In a telephone interview from Saudi Arabia the landlord, Musallam A. Musallam, said that LTCM is taking advantage of him because he’s a foreigner. He says he was “thrilled” when LTCM wanted to rent his building, but is now so furious that “I will fight it tooth and nail to the end.” “If they’d fix the building, we’d start paying rent,” counters a spokesman for LTCM’s management firm. LTCM is trying to have the bankruptcy court oust Musallam in a plan that would give it the building cheap.
So there you are. A simple dispute becomes a major mess. Let’s rename LTCM yet again. How about Largebrained Traders Can’t Makeanythingsimple?
