Court Denies Motion To Lift Restraining Notices

Posted: September 10, 2025 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Category Commercial

Court Denies Motion To Lift Restraining Notices

On August 1, 2025, in Manorhaven Capital LLC v. Marc J. Bern & Partners, LLP, Index No. 654869/2022, Justice Andrew Borrok denied the motion of non-parties to vacate restraining notices served by the Judgment Creditor Plaintiff so the non-parties could pay lawyers and operate the Defendant’s business but not pay their own loan down or otherwise facilitate a foreclosure sale. The Court explained:

As previously discussed, the Defendant stiff armed the Judgment Creditor Plaintiff (NYSCEF Doc. No. 178)[] to avoid paying monies due the Judgment Creditor Plaintiff and concealed that it was going forward with financing with DE Shaw (to cut the Judgment Creditor Plaintiff out despite its obligation to pay the Judgment Creditor Plaintiff in connection with such financing). As discussed above, and previously, DE Shaw had been contacted by the Judgment Creditor Plaintiff about doing the financing that they ultimately did with the Defendant. They told the Judgment Creditor Plaintiff they were not interested in doing the financing with the Defendant. They did it anyway. They never told the Judgment Creditor Plaintiff so that the Judgment Creditor Plaintiff could be paid in connection with the financing at closing. Now, they say their lien is prime to the Judgment and that they can operate the business of the Defendant (including paying unrelated third parties) without paying down their own debt, without foreclosing and without paying the Judgment Creditor Plaintiff the monies owed them either. This is all without a standstill/forbearance agreement.

For clarity, on the record before the Court then and now, not only did DE Shaw fail to contact the Judgment Creditor Plaintiff before the closing to say that they changed their mind and they were doing the financing after all so that the Judgment Creditor Plaintiff would be paid at closing but also it appears that DE Shaw is aiding and abetting the Defendant’s plan to run the law firm without paying the Judgment Creditor Plaintiff monies due the Judgment Creditor Plaintiff and to otherwise frustrate the enforcement of the Judgment by the Judgment Creditor Plaintiff.

Nothing about the Judgment Creditor Plaintiff’s actions prevents DE Shaw from foreclosing on the collateral.[] This is not what DE Shaw seeks in its application to vacate the restraining notices. It does not want the restraining notices vacated so that it can use the monies to pay down its own debt or solely to that extent (tr. 8.1.25). What it seeks instead is to do exactly that which the Defendant always intended -- avoid current payment of the Judgment Creditor Plaintiff the monies they are owed. DE Shaw does not have clean hands and is not entitled to equitable relief (Junkersfeld v Bank of Manhattan Co., 250 AD 646, 649 [1st Dept 1937]). As such, the motion is denied.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning restraining notices.