A Los Angeles County Superior Court judge appointed a new receiver Wednesday to assume control of a prominent Laguna Beach real estate investor’s companies, including the entity managing Hotel Laguna.
In the previously unreported lawsuit filed June 25, Delaware-based Coastline Loans LLC demanded payment from corporations managed by Mohammad Honarkar for a $175 million loan, accrued interest, and attorneys fees.
“Defendants have breached the terms of their respective obligations by various covenants breaches, including but not limited to pending court actions, material representations including but not limited to undisclosed debt, and non-payment of loan fee and interest,” Coastline Loans’ attorney Tom Normandin wrote in the complaint.
This is the third court-ordered receivership to take custody of Honarkar’s real estate holdings within the last year. Covina-based receiver Carl G. Petta is authorized to collect all profits from the properties, according to the July 14 order signed by Judge Mitchell Beckloff.
The portfolio includes several high-profile hospitality and event properties including, the Holiday Inn at 696 S. Coast Hwy., The Hive on Laguna Canyon Road, Seven7Seven, 7 Degrees, Royal Hawaiian restaurant, and the former site of Laguna Nursery. The loan also covers several other short-term rental properties in Laguna Beach, a Corona del Mar commercial building at 2711 E. Coast Hwy., a Redlands apartment community, and a pair of vacant lots near Los Angeles’ Koreatown.
Last July, the receivership proceedings started via a court order connected to Honarkar’s divorce proceedings with his ex-wife. The receiver in that case was ultimately discharged by a judge after he reported the properties were hampered by several lawsuits, a state tax audit and the specter of looming debts, including an estimated $150,000 in back taxes to Laguna Beach.
In January, Honarkar’s now-former creditor filed a foreclosure complaint on a $195.5-million loan backed by a portfolio of 19 properties, according to a lawsuit filed in Orange County Superior Court. This receivership dragged on until the underlying loan was acquired by a entity controlled by Laguna Beach developer Chris Dornin. In a surprising twist, an Orange County Superior Court judge approved an order on June 8 granting permission to Honarkar’s companies to refinance with a new creditor.
Court documents have since revealed Coastline Loans LLC as the new creditor. But by June 24, Coastline declared Honarkar owed them an unpaid current principal of more than $176 million, accruing interest at a daily rate of more than $48,000.
Honarkar downplayed the impacts of the latest receivership on Tuesday.
“The [Orange County] judge approved a refinancing agreement last month, and we have a new lender,” he said in a prepared statement. “The lender requested, and we agreed, that a new receiver would be put in place until the disposition of my divorce—expected in coming weeks.”
The complaint by Coastline Loans doesn’t mention the divorce proceedings.
In a phone interview with the Independent on Friday, Andrew Stupin, CEO of Huntington Beach-based Coastline Real Estate Investments, said his group decided to issue Honarkar the loan because he believes it was a good investment.
“I know the [Hotel Laguna] property. I’ve been a surfer and beachgoer in Orange County since the [1950s],” Stupin said. “The new group with Mo has a great vision for it. I think they have the firepower to make it happen.”
When asked if he was ever concerned about Honarkar’s legal battle with his former creditor, Stupin said he’s not involved in the details of the ongoing litigation
Ioannis Xilikakis verified the legal complaint as an authorized agent of Coastline Loans LLC. The Lake Forest resident is president of phone card wholesaler IX Telecom, Inc. Xilikakis didn’t respond to a phone call seeking comment on Monday.
Laguna Beach partially lifted a stop-work order at Hotel Laguna on Thursday, allowing a remodel of the restaurant, bar, and hotel lobby to resume, according to a city press release.
“This receivership has no bearings on the City’s partial lifting of the stop-work order,” City Manager Shohreh Dupuis said in a statement late Tuesday.
It’s unclear how the appointment of a receiver will impact plans to reopen the hotel’s first floor to the public. The presiding judge ordered Honarkar’s companies to turn over to Petta all banking records, proof of insurance contracts, keys to properties, current rent rolls, and other documents.
Petta didn’t respond to phone calls to his office seeking comment.
“The first phase of the Laguna Hotel revitalization will be completed in a couple of weeks, and we look forward to inviting our friends and neighbors in to experience it and enjoy it,” Honarkar said in a prepared statement.
A hearing is scheduled for Sept. 23 in Los Angeles County Superior Court.