Brooklyn Mirage Creditors Seek Trustee Takeover, Citing “Fraud”

The Brooklyn Mirage drama continues to heat up. Last month, they announced bankruptcy after failing to open the whole summer due to new renovations. The Building Department (DOB) came out and stated they were riddled with significant structural and safety issues. The DOB found a laundry list of issues, from unbraced steel trusses and improper fire-rated materials to a lack of sufficient fire sprinklers and emergency exits.

Now, creditors aren’t just suing for cash. They’re calling for a full-on trustee takeover, citing serious accusations of fraud, mismanagement, and conflicts of interest. An unsecured creditors’ committee has now filed a motion arguing that Avant Gardner has misled people about what was happening during those renovations. They accuse the company of everything from shady finance deals (think merchant cash advances, payday-type stuff) to letting secured lender Axar Capital Management put people in charge who are clearly conflicted.

Axar has proposed a credit bid of at least $110 million as a baseline for any potential sale of assets. That includes part of the secured loans and roughly $45.8 million in new bankruptcy financing.

Avant Gardner allegedly tried to classify the Mirage stage as a temporary structure, dodging stricter construction and safety rules. Their designs reportedly omitted a roof, and floor space was misstated to slip past mezzanine and balcony regulations. Consequence: NYC pulled the permit, and the stage couldn’t open.

There are broader patterns too. They failed to pay vendors and employees, had recurring violations around permits/licensing, and experienced a disaster in 2023 at Electric Zoo. At Ezoo, safety structures didn’t get built, permits were missing, and tickets were oversold. That led to chaos, including people storming the gates.

The situation with the Brooklyn Mirage, once a crown jewel of NYC’s dance music scene, is getting worse and worse.