New York developer loses control of $50M lakeside apartment complex in Duluth

A New York developer, who also is embroiled in controversy over developing the old Central High School site in Duluth, has lost control of an apartment building he bought just three years ago for $50 million.

Lazar “Luzy” Ostreicher twice sought bankruptcy protection for Endi Plaza to avoid being forced into receivership by its primary lender, Fannie Mae.

A U.S. bankruptcy judge last week dismissed Endi’s latest Chapter 11 filing, ruling that it was made in “bad faith.”

That means the Endi apartments — a prime property overlooking Lake Superior on Duluth’s London Road — will return to a receivership ordered in June by a state judge.

In a receivership, a court-appointed third party manages a repossessed property until it is sold.

Neither Ostreicher, of Monsey, N.Y., nor two attorneys for Endi responded to requests for comment.

Ostreicher bought the Endi apartment and retail complex in 2022 before undertaking a separate $500 million hillside residential development in Duluth called Incline Village on the former high school site.

The once promising hillside project fell apart this summer after the city of Duluth questioned Incline Village’s finances, claiming it had breached a development and financing agreement.

Duluth’s economic development authority terminated the agreement with Incline Village in July — before any public money was spent.

Ostreicher’s first big splash in Duluth came in 2018 when one of his companies paid $21 million for Kenwood Village, a newish apartment building near the University of Minnesota Duluth.

The day before Incline Village’s December groundbreaking, Endi Plaza filed for Chapter 11 bankruptcy reorganization, which shields companies from creditors’ claims and litigation.

The bankruptcy filing was meant to forestall Fannie Mae’s quest to force receivership.

In February, Endi asked a bankruptcy court in New York to dismiss its Chapter 11 filing, saying it was negotiating with Fannie Mae. The case was dismissed.

But talks between Endi and Fannie Mae failed, and on June 6, St. Louis County District Judge Eric Hylden ordered Endi Plaza into receivership.

Endi promptly filed for Chapter 11 protection again in New York to freeze the takeover. In court filings, Fannie Mae called Endi’s second bankruptcy “fraudulent” and in violation of Hylden’s order.

Fannie Mae, a government-sponsored credit provider, asked the bankruptcy court to dismiss the latest Endi filing, and the court obliged.