Following oral argument on June 30, 2025, the U.S. Bankruptcy Court for the Southern District of Florida refused to dismiss a Chapter 11 adversary proceeding in which debtors BH Downtown Miami LLC and 340 Biscayne Owner LLC allege that their lenders, Cirrus Real Estate Funding LLC and Cirrus 340BB Lender LLC, attempted to seize a valuable downtown Miami skyline property through a “usurious” $70 million loan. Instead, a summary order entered by the court on July 2, 2025, allowed the debtors to amend their complaint.
The debtors’ complaint was filed in April 2025 to prevent the lenders from gaining control and ownership over plans to develop the existing Holiday Inn Port of Miami-Downtown into an 82-story mixed-use tower potentially worth up to $1.7 billion upon completion. The complaint asserted the lenders charged allegedly “criminally usurious” interest rates under Florida law exceeding 25%. The debtors further alleged the lenders acted in bad faith by stalling on a proposal that would have allowed the property to be temporarily used as a parking lot and sales center, a move that would have generated revenue and helped repay the loan. Instead, the debtors claim the lenders intentionally delayed approval, causing a loan default and positioning the lenders to take over the property. When the lenders scheduled an auction of the debtors’ membership interests and filed claims totaling over $98.5 million, the debtors alleged they were forced to file for bankruptcy (a second time) to prevent the lenders from taking control of the project after default.
The lenders moved to dismiss the complaint in May 2025, arguing that New York law, not Florida law, governed the loan agreement, so the debtors’ allegations that the debt is “usurious and unenforceable” under Florida law are insufficient to state a claim. The lenders further argued the debtors had waived their right to assert defenses related to their payment obligations sufficient to plead either breach of the relevant contracts or breach of the duty of good faith and fair dealing.
During the hearing, the lenders’ counsel urged the court to dismiss the usury claim without allowing the debtors the opportunity to file an amended complaint since there were no new facts introduced, citing “continual delays” and a desire to “move the bankruptcy along.” In contrast, the debtors’ counsel argued the New York choice-of-law provision in the loan documents should not override the factual circumstances connecting the transaction to Florida. Specifically, the debtors’ counsel maintained that Florida’s usury should laws apply to the loan at issue—in its view, a fact question—in part because the property is located in Florida.
The court’s July 2 Order denied the lenders’ motion to dismiss the complaint without prejudice, paving the way for the debtors’ amended complaint, which now alleges new facts to justify the application of Florida’s usury laws.
The case is In re BH Downtown Miami, LLC, No. 1:24-23028 (Bankr. S. D. Fla. July 2, 2025). Plaintiff-debtors BH Downtown Miami and 340 Biscayne Owner are represented by Pardo Jackson Gainsburg & Shelowitz PL and Shapiro, P.A. Defendant-lenders Cirrus 340BB Lender LLC and Cirrus Real Estate Funding, LLC are represented by Meland Budwick, P.A. The order may be found here.
