Y. David Scharf Quoted in Press After Judge Upholds Client’s Exercise of Foreclosure on Mezz Equity, Thereby Allowing Parties to Proceed with Settlement Over Washington Union Station

Morrison Cohen Chair & Co-Managing Partner Y. David Scharf was quoted in the Washington Business Journal and Law360 regarding the latest development in the contentious three-year battle over control of Washington Union Station.

On March 3, 2025, Judge Gregory Woods of the U.S. District Court for New York's Southern District rejected an attempt by a mezzanine borrower to upend mezzanine foreclosures by refusing to cede control over the pledged equity after a commercially reasonable foreclosure sale. In rejecting the arguments raised by Union Station Sole Member, LLC (USSM), Morrison Cohen client Rexmark was able to proceed with its $505 million settlement with Amtrak over the condemnation of the Union Station leasehold interest. 

Judge Woods granted a motion for summary judgment in favor of the mezzanine lender, a South Korean fund with U.S. based agent Rexmark, and against USSM, an affiliate of New York-based Ashkenazy Acquisition Corp. In his ruling, Woods found that USSM defaulted on a 2018 loan for $100 million, thereby allowing Lender to exercise its contractual rights and remedies, including conducting a foreclosure sale on the pledged equity – the entity owning the leasehold interest of Union Station, Union Station Investco LLC (USI).

Judge Woods stated that Ashkenazy had enough personal resources to repay the loan during the default period but refused to do so. He also pointed out that USSM never filed for Chapter 11 bankruptcy, which is often preferred in such cases and would have triggered a clause making Ashkenazy liable for the full amount of the mezzanine loan.

“The court need not ignore the fact that the controlling shareholder of USSM is a ‘significantly wealthy man’ — made wealthier with the proceeds of the mezz loan — and that he has chosen not to contribute additional money to mitigate the effects of the default on the lenders,” Judge Woods ruled. “USSM wants to have its cake and eat it too.”

David told Washington Business Journal, “This decision is a resounding beat-down of the meritless positions that had been advanced to try to disrupt the lender's exercise of control over its collateral.” In Law360, David stated, “The Morrison Cohen team is thrilled to have vindicated our clients' rights and debunks the now proven false Ashkenazy narrative that Rexmark was acting improperly.”

The Morrison Cohen team representing Rexmark includes Y. David Scharf, Latisha Thompson, Kristin Roy, Jarrod Bernstein, Amber Will and Mahnoor Misbah. The case is Daol Rexmark Union Station LLC et al v. Union Station Sole Member, LLC.

Washington Business Journal subscribers may read the article here.

Law360 subscribers may read the article here.