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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.

A Castle with a Storied Past

Built in 1919 by financier Otto Hermann Kahn, Oheka Castle is the second-largest private residence in the United States, surpassed only by North Carolina’s Biltmore Estate. The 109,000-square-foot mansion sits atop Long Island’s highest point, featuring 127 rooms across 443 acres when first constructed.

Over the decades, the property changed hands, serving as a retirement home, a WWII training school, and later a military academy before being abandoned in 1979. Fires and vandalism left it in ruins before Melius purchased it in 1984.

Melius poured millions into restoration, transforming the castle into a premier wedding and event venue. Today, Oheka sits on 22 landscaped acres, surrounded by the Cold Spring Country Club, once its stables.

What’s Next in Chapter 11

Despite the bankruptcy, Melius says Oheka Castle will remain open and operational throughout the proceedings. Plans are also underway for a luxury condominium development on the property.

“Mr. Melius has literally put his blood, sweat, and tears into restoring this landmark,” said his attorney Joseph S. Maniscalco of LaMonica Herbst & Maniscalco LLP. “We will work with all parties to successfully emerge from Chapter 11.”

The case is assigned to U.S. Bankruptcy Judge Louis A. Scarcella, with a management conference scheduled for Aug. 14.