Update: The Bank of Scotland dropped the lawsuit reported in the following story published on Jan. 28, 2021. The case was discontinued on Feb. 5 by stipulation by both parties.
Attorney Alfred E. Donnellan had reiterated Cappelli”™s position, in a Feb. 3 letter to the administrative judge, that the loan was not in default and that Cappelli never received a default notice.
Donnellan noted that this news article prompted other bankers to contact Cappelli and express concerns about the allegations, causing severe damage “for which we intend to seek full redress from Bank of Scotland.”
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The original story is here:
Bank of Scotland (USA) is demanding $17.4 million from White Plains developer Louis R. Cappelli for allegedly defaulting on a personal loan.
Cappelli failed to pay a loan balance on its due date, last April 20, according to a motion for summary judgment filed Jan. 21 in Westchester Supreme Court.
Cappelli responded in an email that he has made the agreed upon payments every month.
“In fact,” he said, Bank of Scotland “auto debits the monthly payment and has been doing so for years.”
The lawsuit includes a copy of a letter from the bank notifying Cappelli that he was in default, dated April 20 and indicating it had been sent by email and overnight mail.
Cappelli said that he did not receive a default notice and that he suspects that remote working and decreased staffing as a result of the Covid-19 crisis explain why.
The loan dates back to 2008, when Cappelli borrowed $30 million. The terms were amended in 2012 and again in 2018.
At that point, he owed nearly $15 million. He agreed to pay $250,000 a month on the principal, plus amortization payments. The balance was to be paid on April 20, 2020.
Cappelli did pay $250,000 monthly through last March, according to the bank, and then $40,000 a month to the end of the year. But it claims he defaulted when he failed to pay the balance on April 20.
As of Jan. 11, Cappelli allegedly owed $13,456,667 in principal and $3,926,457 in interest that continues to accrue at $2,250 a day.
The loan documents do not say why Cappelli borrowed the money.
The 2018 amended loan includes a guarantee by Fuller Development Co., an affiliate of Cappelli Enterprises, to assign consulting fees to Bank of Scotland to secure the debt. The consulting fees were from a construction management deal with G&M Realty L.P.
A hearing on the bank”™s motion for summary judgment is scheduled for March 8.
Manhattan attorneys Michael Lynn and Seth Grantier represent Bank of Scotland.
There is an old bromide:
When you owe the bank $1 million and default, you are screwed.
When you owe the bank $100 million and default, the bank is screwed.