Flatiron Building Auction Referee to Jacob Garlick: Time's Up

The court-appointed referee for the auction of the Flatiron Building told GlobeSt. on Tuesday that Jacob Garlick “defaulted” on his $190M bid for the iconic tower when he failed to deliver a 10% deposit for the building two days after the March 22 auction.

Court-appointed referee Peter Axelrod of the Axelrod, Fingerhut & Dennis law firm told us Garlick is no longer eligible to claim the building by delivering either the $19M deposit or his $190M bid price.

“He defaulted, so no, we can’t do that at this point,” Axelrod told GlobeSt.

Axelrod and the Flatiron Building auctioneer, Matthew Mannion, both reached out to GlobeSt. this week to make it clear that the plaintiff and defendant in the partition suit—Jeff Gural and his partners, who are seeking a divorce from 25% shareholder Nathan Silverstein—have agreed on the rules for the next auction, now scheduled for May 23.

They also wanted to make it clear that the rules in this case are highly unusual—Axelrod and Mannion both told us that building auctions of this type usually require multi-million-dollar deposits along with bids.

Jeff Gural told GlobeSt. on Tuesday that Silverstein would not agree to a deposit larger than $100,000 for the upcoming Flatiron auction. We asked him why his counsel didn’t ask the judge to require a larger deposit at the May 23 auction in the wake of the Garlick fiasco.

“Nathan objected so the judge would take two months to decide,” Gural said. “We’re hoping to avoid another disaster.”

All bidders on May 23 will be required to bring a certified check of $100K, made out to Axelrod. If Garlick shows up—nobody has seen or heard from him since the March 22 auction—he’ll get much closer scrutiny, Axelrod told us.

“He’s going to have to demonstrate that he’s got the financial ability to close,” Axelrod said. “We’re not going to go through this thing again. There are going to be different requirements this time on the bidding.”

Gural agreed. “I think he would have to show he has $190M, but I doubt he will be allowed to bid,” he said.

A consensus among the auction participants—Silverstein could not be reached for comment—is that Garlick is still on the hook for the $19M deposit even if he is no longer in the running to buy the Flatiron Building.

“He is and we plan to sue him, but does he have any money?” Gural told us.

Assuming Jacob Garlick doesn’t show up on the steps of the old county Court House in Manhattan on May 23, any legal action initiated against him will first have to locate him.

Axelrod told us the only time he spoke to Garlick was when he greeted him at the March 22 auction and then congratulated him for “winning” it. The following week—after Garlick missed the deadline for the deposit—Axelrod said, an attorney claiming to represent Garlick began badgering Axelrod with calls about “how he would be able to proceed on his bid.”

The calls were so incessant, Axelrod said, he decided to use some vacation time.