After getting bounced from several of its New York City properties, hotel operator LuxUrban Hotels is now the one doing the bouncing — of its checks, according to a lawsuit filed by the city.
The company had agreed to a $1.2 million settlement with the city after being accused of illegally operating dozens of apartments as illegal short-term rentals, but its first check didn’t clear and it never made another payment, a lawsuit filed by the Mayor’s Office of Special Enforcement claimed, reported Bisnow.
The lawsuit alleged that LuxUrban Hotels, which in 2022 rebranded from CorpHousing Group, used the name change to avoid paying fines levied against CorpHousing Group.
Founded in 2017 by Brian Ferdinand, Miami-based CorpHousing Group operated short-term rentals across the country. It leased units from apartment building owners and rented them out.
The company ran afoul of New York law that prohibited renting residential units for less than 30 days at a time while operating at least 67 apartments from 2019 to 2022, according to data obtained by the city. The company earned $3.9 million on the units.
LuxUrban had agreed to the settlement last spring, which it disclosed to investors in a filing with the Securities and Exchange Commission.
LuxUrban sent a check for $225,000 to the city on April 18 — the first of seven scheduled payments — but the check bounced for “insufficient funds” one week later, the city claimed. The company and its lawyers have not responded to follow-ups from the city, according to the lawsuit.
“The city accepted an offer of $1.2 million to address past illegal short-term rentals and gave the company that is now LuxUrban the chance to move forward as a legal hotel room provider in NYC,” Christian Klossner, executive director of the Mayor’s Office of Special Enforcement, told Bisnow in a statement. “By this action, the city serves notice that it will not allow LuxUrban to shirk its agreed upon responsibility, and that it must pay its debt to the taxpayers of New York City.”
New York City Mayor Eric Adams told Bisnow in a statement that the city “will not allow bad actors to operate in our city, especially those who attempt to subvert the law and avoid accountability by hiding their identity and refusing to pay their settlements.”
CorpHousing Group went public in September 2022, but rebranded just months later as part of a business model shift to hotel operations.
Those efforts, however, seem to have fallen on hard times. The operator’s hotel portfolio, which once spanned 1,000 hotel rooms across four cities, has dwindled to just six properties in New York City.
The company also faces a number of lawsuits for alleged nonpayment of rent. Last year, a short-seller report led to the brief removal of Ferdinand as CEO, who later returned to the job.
The company’s stock was delisted from the Nasdaq Stock Exchange in mid-January; in its third-quarter filing, it has just under $200,000 in cash against $83.5 million in liabilities.
—Jake Indursky