MOM CA Investco: Mo Honarkar Feud Sends $382M Portfolio to Receivership

MOM CA Investco LLC's bankruptcy put a Laguna Beach real estate portfolio valued at $382 million on an undistressed basis into chapter 11 after a dispute between business partners left property control and lender remedies contested. MOM CA Investco LLC and approximately 60 affiliated special purpose entities filed in the U.S. Bankruptcy Court for the District of Delaware on February 28, 2025. The dispute between telecom entrepreneur Mohammad "Mo" Honarkar and tech investor Mahender Makhijani included armed guards taking control of properties, mobile billboards displaying fraud accusations, and a JAMS arbitration finding fraud by clear and convincing evidence. Six months later, the bankruptcy court dismissed the cases, sending the properties to state court receivership and leading to reported losses at regional banks.

Multiple regional banks—including Zions Bancorporation and Western Alliance Bancorporation—disclosed losses connected to the properties, with total troubled debt exceeding $270 million. The case involved a complex joint venture structure and a partner dispute in which secured creditors found themselves, as one lender described it, "held hostage" by the parties.

Debtor(s)	MOM CA Investco LLC (~60 jointly administered SPEs)
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	25-10321 (jointly administered)
Judge	Hon. Brendan Linehan Shannon
Petition Date	February 28, 2025 (lead case); March 10, 2025 (remaining SPEs)
Dismissal Date	August 18, 2025
Assets	$100 million to $500 million
Liabilities	$100 million to $500 million
Undistressed Property Value	~$382 million
Total Secured Debt	~$195 million+
Flagship Asset	Hotel Laguna (~$82.5 million)
Outcome	Properties to state court receivership
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Mo Honarkar-Makhijani Joint Venture and SPE Structure

Mohammad "Mo" Honarkar built a telecommunications business and sold his mobile phone operation to Verizon. He then moved into real estate, accumulating properties from Los Angeles's Koreatown to a $65 million apartment complex in Redlands. The portfolio grew to include hotels, apartment buildings, office properties, and vacation rentals concentrated in and around Laguna Beach.

The COVID-19 period. During the pandemic, Honarkar went through a divorce. He defaulted on a $195 million loan tied to the properties. He sought partners who could help refinance the debt.

The partnership forms. In June 2021, Honarkar agreed to form a joint venture with Mahender Makhijani—an Austin, Texas-based tech entrepreneur who founded Continuum Analytics and Quansight—along with other investors. The MOM CA structure was established to acquire and develop real estate in Laguna Beach. The partners created approximately 60 special purpose entities, each holding specific properties and subject to individual loan obligations with various bank lenders. At its peak, the portfolio was valued at $360 million and backed by a $195 million loan.

The flagship asset. The portfolio's flagship asset was Hotel Laguna, a historic oceanfront hotel in downtown Laguna Beach. Valued at approximately $82.5 million, the hotel was the portfolio's most valuable single asset. The property's leasehold structure later affected the receivership sale process.

Portfolio composition and financing. Beyond Hotel Laguna, the approximately 60 SPEs held apartment complexes, commercial office buildings, and individual homes operating as vacation rentals, concentrated in Laguna Beach and the surrounding Orange County coastal communities. Each SPE carried its own loan obligations with various bank lenders. When the partnership broke down, seven or more banks held overlapping claims and competing collateral interests across the SPEs.

Partnership Dispute and Fraud Findings

Accusations and counter-accusations. The partnership deteriorated after formation. Honarkar accused his partners of fraud, self-dealing, and mismanagement of the properties. The Makhijani group disputed the allegations and made counter-claims regarding Honarkar's conduct.

Armed takeover and public campaign. Makhijani used armed guards to take over some of the properties, and control of those properties later became a contested issue in the bankruptcy. He also hired mobile billboards to drive around Laguna Beach displaying photographs of Honarkar and accusing him and local city employees of corruption.

JAMS arbitration findings. The partners' disputes proceeded to binding arbitration before JAMS, a private dispute resolution provider. The arbitration proceedings, filed under Case No. 5220003126, produced a Partial Interim Award. The arbitrator found by clear and convincing evidence that the respondents had engaged in fraud, title and bank fraud, and obstruction.

The fraud findings extended to multiple parties:

Party	Arbitration Finding
Mahender Makhijani	Fraud, title and bank fraud, obstruction
Continuum Analytics	Fraud
Andrew Stupin	Fraudulent inducement
Nano Banc	Fraud

The arbitrator awarded compensatory and punitive damages to Honarkar. This arbitration award came approximately one week before the bankruptcy filing. The findings named Nano Banc, one of the secured lenders, alongside Makhijani and Stupin.

Prior receivership actions. Before the bankruptcy filing, various lenders had already begun pursuing state court receivership actions against individual properties in the portfolio. With Honarkar and Makhijani unable to agree on payments, the lenders sought court-appointed receivers to take control of their collateral. When the debtors filed for chapter 11 protection, the automatic stay halted those pending receivership proceedings.

Capital Structure and Bank Exposure

The MOM CA portfolio was financed through multiple bank loans, each secured by individual properties within the SPE structure. The loans defaulted after the partnership broke down, and lenders pursued litigation and reported losses.

Lender	Estimated Exposure	Notes
Zions Bancorporation	~$60 million	16 properties pledged as collateral
Western Alliance Bank	~$99 million	Filed lawsuit August 2025
Nano Banc	~$100 million+	Named in JAMS fraud findings
Enterprise Bank & Trust	Various	Filed relief from stay motion
Banc of California	Various	Filed lawsuit; described being "held hostage"
Preferred Bank	Various	Filed relief from stay motion
Wilshire Quinn	Various	Filed relief from stay motion

The scope of troubled debt. The exposure extended beyond the direct property loans. Andrew Stupin allegedly guaranteed roughly $115 million in loans that are now in default. Combined with the Western Alliance and Zions loans, Stupin's ties to troubled debt exceeded $270 million. Between April and August 2025, Banc of California, Enterprise Bank & Trust, and Nano Banc sued the investor group to collect on loans worth a combined $108 million.

Collateral fraud allegations. The bank litigation revealed allegations of systematic fraud in the collateral arrangements. Zions Bank, through its subsidiary California Bank & Trust, discovered that its collateral carried prior liens, leaving its security interest subordinate to obligations it had not known about. For one Laguna Beach property, the deeds had been assigned to Nano Banc, leaving Zions with compromised collateral.

Gerald Marcil, a Los Angeles landlord, was among defendants named in complaints alleging bait-and-switch tactics that manipulated loan structures. The investor group was accused of systematically deceiving banks about collateral positions.

Chapter 11 Filing and Cash Collateral Disputes

Filing and joint administration. MOM CA Investco LLC filed for chapter 11 bankruptcy in Delaware on February 28, 2025. The company cited $100 million to $500 million each in assets and liabilities. The filing came one week after the JAMS arbitration ruling against Makhijani and others.

On March 10, 2025, the remaining approximately 59 SPE debtors followed with their own petitions. The cases were jointly administered under Case No. 25-10321. Judge Brendan Linehan Shannon was assigned to oversee the proceedings.

Independent management and professional retentions. The debtors appointed Robbin Itkin as Independent Manager, who assumed full managerial control on March 4, 2025, replacing prior management. Mark Shinderman of FTI Consulting was appointed Chief Restructuring Officer, bringing more than 35 years of restructuring experience from prior partnerships at Milbank LLP and Munger, Tolles & Olson LLP. Potter Anderson & Corroon LLP, with Christopher M. Samis as lead attorney, served as bankruptcy counsel, Buchalter as special counsel, and Stretto as claims and noticing agent. The principal stakeholders retained their own counsel: Paul Hastings LLP and Polsinelli PC for Honarkar and 4G Wireless LLC, and Pachulski Stang Ziehl & Jones LLP for the MOM members.

Cash collateral and stay relief disputes. The Cash Collateral Motion filed on February 28, 2025, was litigated throughout the case. Multiple bank lenders objected, raising concerns about adequate protection for their secured interests and the use of cash generated by the properties.

The court entered a First Interim Cash Collateral Order on March 19, 2025. The properties generated income, but multiple secured lenders claimed priority interests in that cash, and the partnership dispute left control of the funds contested.

Secured lenders also moved for relief from the automatic stay. Enterprise Bank & Trust, Preferred Bank, Wilshire Quinn, and other secured creditors filed motions seeking permission to pursue state court remedies against their collateral.

A judge's frustration. Judge Brendan Shannon expressed frustration with the case dynamics. During a court hearing, Shannon told the parties that "each is holding a gun to their own head and saying, 'Do this, or I'll shoot.'"

Banc of California stated in court papers that lenders were "held hostage for four months by the warring parties" who could not resolve their disputes. The judge concluded that Honarkar faced a choice: either dismiss the bankruptcy case or turn the properties over to a bankruptcy trustee.

Case Dismissal and Receivership

Emergency motion to dismiss. On June 27, 2025, Honarkar and 4G Wireless LLC filed an Emergency Motion to Dismiss the chapter 11 cases. The motion argued that bankruptcy was not the appropriate forum for resolving the underlying partnership disputes and that state court proceedings—including the pending receivership actions—offered a more suitable mechanism for disposing of the properties and resolving competing claims.

The dismissal order. On August 18, 2025, the court entered the Order Dismissing Chapter 11 Cases. The dismissal came approximately six months after the lead case filing. The case was formally closed on October 20, 2025.

Transition to state court receivership. With the bankruptcy dismissed, the properties transitioned to state court receivership. A court-appointed receiver took control of the properties, replacing the Independent Manager structure from bankruptcy.

Hotel Laguna receivership sale. The flagship Hotel Laguna entered a receivership sale process managed by Atlas Hospitality Group and Hilco Global, focused on the leasehold interest. The sale packaged together properties that had been held across multiple SPEs, with the ownership history, ongoing litigation, and leasehold structure shaping the process. Bids were due December 11, 2025, liquidating the portfolio's most valuable asset outside the bankruptcy framework.

Regional Bank Fallout

Bank disclosures. The MOM CA Investco case extended beyond the bankruptcy docket into regional bank disclosures. Bad loans reported by Zions and Western Alliance traced back to the MOM CA Investco bankruptcy, feeding trading volatility in the regional banking sector. As the firm appeared at the center of banks' loan problems, regional bank disclosures highlighted credit quality and exposure to similar situations.

Lender litigation. Zions' October 2025 lawsuit listed 16 addresses that had served as collateral for its $60 million loan. Six of those addresses were listed as assets of MOM CA Investco LLC when the firm filed for bankruptcy, indicating the properties had been pledged to more than one lender.

Underwriting issues. The case drew regional banking attention to underwriting and due diligence in commercial real estate lending. The fraud allegations included claims that lenders received collateral with undisclosed prior liens.

The disclosures followed the 2023 bank failures that had claimed Silicon Valley Bank, Signature Bank, and First Republic. Zions and Western Alliance disclosed losses connected to the California real estate portfolio and fraud allegations.

Key Timeline

The timeline tracks the petition filing, Cash Collateral Motion, Emergency Motion to Dismiss, dismissal order, reported lender litigation, and Hotel Laguna receivership sale process.

Date	Event
June 2021	MOM CA joint venture formed by Honarkar and Makhijani
2022-2024	Joint venture dispute escalates; arbitration proceedings commence
2024	JAMS arbitration finds fraud by Makhijani, Continuum, Stupin, Nano Banc
2024-2025	Armed guards takeover properties; mobile billboards display fraud accusations
February 21, 2025	JAMS Partial Final Award issued
February 28, 2025	Lead case (MOM CA Investco LLC) chapter 11 petition filed
February 28, 2025	Cash Collateral Motion filed
March 4, 2025	Independent Manager assumes full control
March 10, 2025	Remaining ~59 SPE petitions filed
April-June 2025	Multiple relief from stay motions filed by bank lenders
June 27, 2025	Emergency Motion to Dismiss filed by Honarkar/4G Wireless
August 18, 2025	Order Dismissing Chapter 11 Cases entered
August 2025	Western Alliance files lawsuit seeking ~$99 million
October 2025	Zions files lawsuit listing 16 properties as collateral
October 20, 2025	Case formally closed
October 2025	Bank earnings reveal losses tied to MOM CA portfolio
December 11, 2025	Hotel Laguna receivership bids due

Frequently Asked Questions

What was MOM CA Investco?

MOM CA Investco LLC was a joint venture formed in June 2021 between Mohammad "Mo" Honarkar (through 4G Wireless LLC) and Mahender Makhijani (through Continuum Analytics). The structure held approximately 60 special purpose entities owning real estate assets in Laguna Beach, California, including the historic Hotel Laguna. The properties were valued at approximately $382 million in an undistressed scenario.

Why did MOM CA Investco file for bankruptcy?

The MOM CA Investco filing arose from a dispute between the joint venture partners. The partnership dispute included fraud allegations, armed property takeovers, and a JAMS arbitration finding fraud by Makhijani and others. The bankruptcy filing came one week after the arbitration ruling.

What happened to the bankruptcy cases?

The cases were dismissed on August 18, 2025, approximately six months after the lead case filing. The Dismissal Order sent the properties to state court receivership, where the receivership sale process could proceed without the chapter 11 cases.

What was the portfolio worth?

The undistressed portfolio value was approximately $382 million, with the flagship Hotel Laguna valued at approximately $82.5 million. At its peak, the portfolio was valued at $360 million and backed by a $195 million loan.

Which banks were affected?

Multiple regional banks held secured debt against the properties, including Zions Bancorporation, Western Alliance Bancorporation, Nano Banc, Enterprise Bank & Trust, Banc of California, and Preferred Bank. The total troubled debt connected to the investor group exceeded $270 million. Bad loan disclosures by Zions and Western Alliance contributed to trading volatility in regional bank stocks.

What were the fraud allegations?

A JAMS arbitration found by clear and convincing evidence that Mahender Makhijani, Continuum Analytics, Andrew Stupin, and Nano Banc engaged in fraud, title and bank fraud, and obstruction. Bank lenders separately alleged collateral fraud, with Zions discovering that its collateral carried prior liens and that deeds had been assigned to Nano Banc without disclosure.

What happened to Hotel Laguna?

After the bankruptcy dismissal, Hotel Laguna entered a receivership sale process managed by Atlas Hospitality Group and Hilco Global. The sale focused on the leasehold interest, with bids due December 11, 2025. The receivership process covered the portfolio's most valuable single asset outside the bankruptcy cases.

How did this affect regional bank stocks?

The MOM CA Investco case contributed to trading volatility in regional bank stocks. Zions Bancorporation and Western Alliance Bancorporation disclosed losses connected to the portfolio.

What did the bankruptcy judge say about the case?

Judge Brendan Shannon expressed frustration with the parties, stating during a hearing that "each is holding a gun to their own head and saying, 'Do this, or I'll shoot.'"

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