- A $360M California property portfolio, including Hotel Laguna, is at risk of fire-sale liquidation due to a bitter dispute between co-owners Mohammad Honarkar and Mahender Makhijani.
- The ongoing fight in bankruptcy court has stalled asset sales and raised the likelihood of value-destructive outcomes, with the judge considering dismissal or liquidation via a trustee.
- The case underscores how unresolved infighting can derail Chapter 11 reorganization efforts and potentially erode real estate values through forced sales or prolonged litigation.
A High-Stakes Property Battle in Laguna Beach
According to Bloomberg, a once-prized real estate portfolio spanning luxury vacation rentals and landmark properties like Hotel Laguna may be headed for court-ordered liquidation. This comes after a heated dispute between its owners paralyzed restructuring efforts.
The portfolio, tied to the company MOM CA Investco LLC, entered Chapter 11 bankruptcy earlier this year—but the process has stalled as entrepreneur Mohammad Honarkar and investor Mahender Makhijani battle for control.
$360M in Assets, Now at Risk
At its peak, the portfolio was valued at $360M and backed by a $195M loan. It includes:
- Hotel Laguna, valued at $82.5M
- Multiple vacation rentals in Laguna Beach
- An Inland Empire apartment complex worth $65M
- Properties in Los Angeles’ Koreatown
The court expected sales from these assets to cover outstanding debt. However, internal conflict has frozen the process and put significant pressure on asset values.
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Chapter 11 Unraveled by Internal Conflict
The bankruptcy judge, Brendan Shannon, criticized the owners’ actions, comparing their standoff to “each holding a gun to their own head.” He’s now weighing whether to dismiss the case entirely or appoint a trustee to liquidate the assets—either of which would likely lead to steep value losses.
The feud began after Honarkar defaulted on loans during the pandemic and partnered with Makhijani’s group to recapitalize the business. But the relationship quickly broke down, with allegations of fraud, hostile property takeovers with armed guards, and a public smear campaign involving mobile billboards in Laguna Beach.
Legal Limbo and Looming Consequences
A key February arbitration ruling appeared to favor Honarkar, potentially restoring his control of the company. However, that decision can’t be enforced until a financial accounting is complete—expected by December. Meanwhile, Makhijani’s side pushed the company into bankruptcy, hoping to sell off the assets quickly.
Judge Shannon has blocked attempts by Makhijani’s group to finance the bankruptcy, citing their loss in arbitration. But Honarkar has failed to produce alternative funding, leaving the court with few options.
Why It Matters
The fight highlights the fragility of real estate empires built on leveraged assets and complex partnerships. If the case is dismissed or moved to liquidation, fire-sale pricing and renewed litigation could significantly diminish returns for creditors and investors.
Bankruptcy trustees typically prioritize speed over valuation—potentially turning a $360M portfolio into a deeply discounted asset dump. Alternatively, dismissing the case would open the door to years of property-level court battles.
What’s Next
Judge Shannon has scheduled a critical hearing for June 8 to determine whether the case will proceed, be dismissed, or move into liquidation. Unless the parties reach an agreement or new funding emerges, the saga may end in a courtroom fire sale—marking one of the most contentious real estate disputes in recent California memory.
