How Robert Dren Became a New York Real Estate Bankruptcy Judge

Judge Robert Drane and David Goldwasser (American Bankruptcy Institute, LinkedIn/illustration by Kevin Rebong for The Real Deal)

Judge Robert Drane and David Goldwasser (American Bankruptcy Institute, LinkedIn/illustration by Kevin Rebong for The Real Deal)

When Toby Moskovitz was losing her trendy Brooklyn hotel to foreclosures last year, she charted a course to the suburbs.

Partners of Moskovits’ Heritage Equity have been fighting with its lender, Benefit Street, which claimed a $68 million Williamsburg Hotel mortgage was in default. Brooklyn-based Heritage has turned to David Goldwasser, a fast-talking Florida-based bankruptcy specialist who has earned a reputation for exploiting a loophole that allows New York City developers to file for bankruptcy in White Plains.

Big companies in dire straits are known to rent offices in the quiet city to qualify for restructuring there. Historically, they knew which bankruptcy judge they would get, because Westchester County had only one: Robert Dren.

That raised eyebrows last year, when Drain agreed to reorganize Purdue Pharma that makes OxyContin, a company blamed for fueling the opioid crisis. Critics said Purdue University and others were “shopping” because Drain believed it favored debtors.

The suspicion that companies are manipulating the system is not new. Senator Elizabeth Warren sponsored a law that would limit companies’ ability to choose their courts. Late last year, New York’s Southern District — which covers Manhattan, the Bronx and six suburban counties including Westchester — passed a rule to randomly assign judges to major Chapter 11 bankruptcies filed in the region, but it does not apply to entities with less than $100 million in assets or liabilities.

Drain Bank denies filing Westchester County debtors for favorable rulings.

“Any assertion that people somehow chose the place in front of me to get a certain result is just nonsense and offensive and does not stand still,” he said in an interview.

Records show, however, that for years, Brooklyn and Manhattan developers flocked to Drane Court – with help from Goldwasser.

analysis by The real deal It found that at least 33 Goldwasser-related LLCs have been in Westchester County Bankruptcy Court since 2013. Most of the properties are in Brooklyn or Manhattan, but there is one as far away as Florida.

Besides the Williamsburg Hotel, Goldwasser helped bankrupt other notable properties in Westchester, including the Cornell Realty’s Tillary Hotel in downtown Brooklyn. Chaskiel Strulovitch’s portfolio of 31 apartments in Brooklyn; and Rafael Toledano rental apartments in East Village. All of them saw their bankruptcy filings go through Drain.

“Any assertion that people somehow chose the place in front of me to obtain a certain result is just nonsense.”

– Robert Drane, US bankruptcy judge

Boca Raton-based Goldwasser, 40 with a toothy smile, describes himself as an expert in restructuring distressed companies and a man who does it all by book. He said he has filed several bankruptcies in Brooklyn’s Eastern District and denied that he directed clients to Drane Court for a sympathetic ruling.

However, he is quick to praise Drain’s expertise in handling difficult bankruptcy cases, calling him “one of the smartest and fairest judges most people in the country have seen.”

However, legal experts have raised concerns about the number of Brooklyn projects developers have been able to access in his court.

Why do they want to be in White Plains instead of Brooklyn? “That’s the question,” said Adam Levitin, a Georgetown Law professor who specializes in bankruptcy cases. “What do they get with Judge Derin looking at their cases?”


The Williamsburg Hotel case that Derren heard has drawn close scrutiny. An American trustee – essentially a monitor of the bankruptcy process – claimed that more than $1 million was transferred without proper court oversight and that tracking the money was impossible because the debtor omitted the information in its monthly reports.

As a result, the trustee sought to shift the case from a Chapter 11 reorganization to a Chapter 7 liquidation, leaving a court-appointed representative to control the assets, or dismissing the case altogether.

When a company files for bankruptcy, it must open its books and have its operations and finances subject to a judge’s approval. The allegations of the supervisory authority indicate that the debtor ignored these basic rules.

“The debtor sought protection from his creditors and accepted the benefits of bankruptcy protection,” Greg Zipps, an attorney for the US trustee, wrote in the filing. “Creditors are entitled to the protection afforded by the process as well.”

However, Goldwasser said the regent misunderstood the situation. He said the management company made the transactions, and should be allowed to operate freely because it is separate from the property owner.

Drain the ultimate ruling against the guardian. The bankruptcy lawsuit is still pending and the U.S. trustee has filed another application for the appointment of a trustee under Chapter 11 following the findings of the court-appointed examiner. Moskovitz declined to comment.

“The American trustee has had a very hard time getting around the fact that the management company is not in bankruptcy,” Goldwasser said.

complex network

Experts said filing for bankruptcy in a remote location may seem strange, but it is legal.

Why do they want to be in White Plains instead of Brooklyn? What do they get from hearing Judge Derren in their cases? “

Adam Levitin, Georgetown Law

Large corporations and nonprofit organizations do this routinely. The Boy Scouts of America, headquartered in Texas, filed for bankruptcy in Delaware by creating a subsidiary just months ago. Late last year, HNA Group, which owns the 245 Park Avenue skyscraper in Manhattan, filed for bankruptcy in Delaware.

“The rules of the place of bankruptcy are very lax,” said Levitin, a professor at Georgetown University.

Goldwasser admits that he is sometimes questioned about venues by other parties.

“They’re like, ‘Why do real estate in Texas file in Brooklyn?'” Goldwasser said. “When you file in a different physical area than they want, they will file a complaint.”

In general, a company can file for bankruptcy at its principal place of business, where its principal assets are located, or where it is incorporated, Levitin noted. But he said it could also file a pending subsidiary’s bankruptcy case. The trustee or creditor is allowed to challenge the place.

It is not clear exactly how Goldwasser got his case to Westchester, but in his files, he often claimed that the case was related to another pending case in the county.

Williamsburg’s bankruptcy ended in front of Drain after Goldwasser claimed he was connected to four other Westchester County cases involving other properties owned by Moskovits.

It’s possible that Strolovich’s bankruptcy in Brooklyn hit the White Plains in 2019 by getting attached to another case. Goldwasser put the project into bankruptcy after lender Maverick Real Estate Partners alleged that $40 million of loans it took were in default. Jennifer Rissen of Caswitz Benson Torres, a Maverick actress, declined to comment.

The affiliation in many of these cases was not the developers but Goldwasser himself: he either ran the companies through bankruptcy or had a stake in them.

The Toledano case, for example, involved a Manhattan property owner, a Manhattan purse, and a Manhattan lender, Madison Realty Capital. (It didn’t end well for Toledano: Madison acquired the East Village property. Aside from bankruptcy, Toledano was banned from the industry in New York for five years.)

Long before that, Goldwasser had managed the East Village portfolio. A filing in 2017 claimed that Goldwasser’s firm, GC Realty Advisors, owns a 49 percent equity position in the corporate entity, which listed a Manhattan address.

Under New York’s local bankruptcy law, debtors in Manhattan or the Bronx are set before a Manhattan judge. If the debtor is in Rockland County or Westchester County, the clerk must refer the case to Westchester.

However, there is a caveat that “cases regarding affiliated debtors are assigned to the same judge.”

The Toledano portfolio file claimed that the bankrupt owner of the company was “affiliated” with six other pending cases in Westchester County, all of which are linked to Goldwasser. One dates back to 2014 and involved the bankruptcy of the Jersey Shore shopping center in Manhawken, 120 miles away, which somehow made its way to Drain Court.

The chain becomes more complex.

Goldwasser linked the 2014 shopping center case to another case filed in Drain Court in 2013 in which Goldwasser was listed as a manager. This was related to Goldwasser’s bankruptcy of the Bronx property in 2012. The Bronx case was in turn related to a case in Drain Court in 2011 that had an address in Rockland County.

Seven additional entities linked to Goldwasser were linked to the Toledano portfolio. In one, the 174-key Tillary Hotel Company, owned by Isaac Hager’s Cornell Realty, filed for bankruptcy in 2020, alleging belonging to an East Village case. Goldwasser was responsible for the restructuring.

The filings show Goldwasser could take a case to Drane Court by loosely tying it one year earlier.

For his part, Goldwasser said it makes sense to have so many cases in one courtroom.

“It may sound funny, but when you have three or four cases before the same judge at the same time,” he said, “there are economies of scale from being able to schedule hearings on the same day as case conferences.”

Lenders who wrestle with Goldwasser’s clients sometimes bring up a dark episode from his past: In 2003, he pleaded guilty to a criminal bank fraud in Westchester County and was sentenced to 27 months in prison and required to pay $3.3 million in damages. As a condition of his release, he was not allowed for a period of time to be an agent.

One of the lenders in the Strolovich case asserted that “concerns of fraud and deception affecting debtor management are increasing because of Goldwasser’s involvement.”

But Goldwasser said the credit ban only applies when it was on supervised release and expired years ago.

“It grew up because people are uneducated,” Goldwasser said. “Lawyers like to throw things away. When that comes on file, I say, ‘Wow, they don’t have anything, because that’s what they throw in.'”

exit plan

Unlike the credentials of some justices making their way to the state bench through an inward-driven political process, Drane’s credentials are unquestioned.

After graduating from Columbia Law School, he rose to become a partner in the bankruptcy division of the New York law firm of Paul, Wes, Rifkind, Wharton & Garrison. In 2002, Drain was appointed to the US Bankruptcy Court in the Southern District of New York Court in Lower Manhattan before moving to White Plains Court in 2009.

He presided over large and complex bankruptcies such as that of Sears Holdings. He’s earned a name as one of the nation’s top bankruptcy judges, though his critics say he’s biased toward debtors—a notion that Dren rejects.

If you look at the results [of] The cases that were brought before me, some were in favor of the debtor, some were unfavorable, and some were between them,” he said. “And I hope and trust in all because of the merits.”

Levitin described Drain Bank as knowledgeable and hard-working, but said bloggers have concluded that low-profile “auto bankruptcies” don’t catch his eye.

“These judges were not selected based on their experience,” he wrote in a blog last year. “Instead, they are chosen because the debtors believe they will rubber stamp their plans.”

Drain announced last year that he would retire in June, despite the 2030 mandate limit. “I will be 65 in June,” he explained. “I’ve been on the bench for 20 years.”

Goldwasser said Dren’s departure would not have a major impact on his business because it has been bankrupt in many other courts and because restructurings are often resolved out of court.

But that doesn’t mean he won’t miss him.

“Yes, it’s sad to see him go,” Goldwasser said. “But everyone has their time.”