The owner of Oheka Castle, a century-old Gold Coast landmark on Long Island, has filed for Chapter 11 protection in New York bankruptcy court in a last-minute effort to block a foreclosure sale and run its own controlled sale process.
In filings late Thursday, Kahn Property Owner LLC — led by developer Gary Melius — said the automatic stay triggered by Chapter 11 will allow it to stop a scheduled foreclosure auction and instead pursue a strategy aimed at preserving the property’s value for creditors.
Foreclosure Fight Over Historic Estate
The looming foreclosure stems from years of legal and financial battles. A receiver has managed Oheka’s operations since 2019, and the mortgage note — now held by 135 W. Gate Drive LLC — scheduled a foreclosure sale for August 7.
Kahn Property Owner listed $63 million in debt against $92.8 million in assets, nearly all tied to the castle and surrounding grounds. Roughly $50 million of that debt is secured by the mortgage note at the center of the dispute.
“Under Chapter 11 protections, the debtor will protect assets, maximize estate value, and propose a confirmable reorganization plan,” Melius said in a sworn declaration.
