Key facts
- YSA Investments, an entity linked to Efraim Diveroli, filed for Chapter 11 bankruptcy.
- The filing halts ongoing legal battles over a portfolio of more than 25 properties.
- Diveroli aims to take control of the properties from Vesta Capital following loan defaults.
- Vesta founder Marc Kulick allegedly took loans from Diveroli at extremely high interest rates.
- YSA claims it is owed $932 million and has placed second mortgages on Vesta's assets.
- Fannie Mae has initiated foreclosure proceedings on eight of Vesta's properties.
YSA Investments, an entity associated with Efraim Diveroli, a figure known for his past as an arms dealer and the subject of the film 'War Dogs,' has filed for Chapter 11 bankruptcy in Delaware. This legal maneuver effectively halts ongoing litigation in Texas and other states, creating a potential pathway for Diveroli's firm to gain control of a portfolio comprising over 25 apartment properties. The dispute centers on loans that Vesta Capital founder and CEO Marc Kulick allegedly took from Diveroli at exorbitant interest rates, including one with a 7,000% daily compounding rate, before defaulting.
YSA claims it is owed $932 million and has placed second mortgages on Vesta's assets as collateral, a claim Kulick disputes, stating he only pledged his share of the business. YSA has already taken over the management of Vesta's properties in Tulsa, Oklahoma, directing tenants to pay rent through its portal. Competing claims and actions are underway, including foreclosure proceedings initiated by Fannie Mae on eight properties and multiple other bankruptcy filings related to Vesta's assets.
The bankruptcy filing by YSA Investments, which lists between $500 million and $1 billion in assets and liabilities, aims to consolidate the legal challenges. The firm intends to restore and then sell the properties to long-term local owners, though Vesta Capital and Kulick are actively fighting to retain control. The situation is further complicated by ongoing investigations and lawsuits against Kulick from former partners alleging financial misconduct.