MOM CA Investco: Partner Feud Derails $382M Laguna Beach Portfolio

The bankruptcy of MOM CA Investco LLC centered on a Laguna Beach real estate portfolio valued at $382 million and a dispute between business partners. MOM CA Investco LLC and its approximately 60 affiliated special purpose entities filed for chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware on February 28, 2025. The First Day Declaration described the portfolio, partnership structure, and circumstances leading to the filing. The dispute between telecom entrepreneur Mohammad Honarkar and tech investor Mahender Makhijani included armed guards taking control of properties, mobile billboards driving through town 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.

The Joint Venture: Origins and Structure

The MOM CA Investco joint venture emerged from financial distress. Mohammad Honarkar had built a telecommunications empire, ultimately selling his mobile phone business to Verizon. He then pivoted to 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. Beyond Hotel Laguna, the approximately 60 SPEs held a mix of commercial and residential properties concentrated in Laguna Beach and the surrounding Orange County coastal communities. The portfolio included apartment complexes, commercial office buildings, and individual homes operating as vacation rentals. The fragmented ownership structure across dozens of SPEs created complexity in both financing and eventual liquidation.

The financing structure. Each SPE maintained its own loan obligations with various bank lenders. This structure allowed the partners to isolate liability at the property level and access different lending relationships for each asset. The fragmentation meant that when the partnership collapsed, seven or more banks had overlapping claims, competing collateral interests, and limited visibility into the overall financial picture.

The Partnership Collapse

The joint venture that was intended to address Honarkar's real estate holdings became a dispute between the partners.

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. What began as a business disagreement became a public dispute.

Armed Property Takeover.

The dispute moved from negotiations to physical confrontations. At one point during the conflict, Makhijani used armed guards to take over some of the properties. The armed takeover showed the breakdown of the partnership structure and raised questions about property control that later complicated the bankruptcy proceedings.

Mobile Billboard Campaign.

The dispute spilled into public view through a public campaign. Makhijani hired mobile billboards to drive around Laguna Beach displaying photographs of Honarkar and accusing him and local city employees of corruption. The billboards drew local attention and brought the dispute into public view.

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:

The arbitrator awarded compensatory and punitive damages to Honarkar. This arbitration victory came approximately one week before the bankruptcy filing, establishing a factual record of alleged misconduct.

The arbitration findings extended to Nano Banc, one of the secured lenders, alongside Makhijani and Stupin. The findings affected lending relationships and collateral positions.

Prior Receivership Actions.

Before the bankruptcy filing, various lenders had already begun pursuing state court receivership actions against individual properties in the portfolio. These pre-petition receivership proceedings reflected that the partnership dispute limited workout negotiations. With Honarkar and Makhijani unable to agree on payments, lenders sought court-appointed receivers to take control of their collateral and preserve asset value.

The overlap between the receivership actions and the subsequent bankruptcy created procedural complexity. When the debtors filed for chapter 11 protection, the automatic stay temporarily halted the receivership proceedings. This provided time for the debtors but frustrated lenders who had invested time and money in the state court process.

Capital Structure and Bank Exposure

The MOM CA portfolio was financed through multiple bank loans secured by individual properties within the SPE structure. This fragmented capital structure meant that when the partnership collapsed and defaults occurred, numerous lenders found themselves exposed to litigation risk and potential losses.

Secured Lender Positions.

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 seeking 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—meaning the bank's security interest was 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, contributing to losses that would ripple through the regional banking sector.

The Chapter 11 Proceedings

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, creating a single procedural framework for the complex multi-debtor structure. Judge Brendan Linehan Shannon was assigned to oversee the proceedings.

Independent Manager and CRO Appointment.

Given the dispute between the joint venture partners, neutral management was established early in the case. The debtors appointed Robbin Itkin as Independent Manager, with the Independent Manager assuming full managerial control on March 4, 2025, completely replacing prior management.

Mark Shinderman of FTI Consulting was appointed Chief Restructuring Officer. Shinderman has more than 35 years of restructuring experience and was previously a partner at Milbank LLP and Munger, Tolles & Olson LLP. His appointment came shortly after he joined FTI Consulting as a Senior Managing Director. He is a Fellow of the American College of Bankruptcy and was named "Lawyer of the Year" in Bankruptcy and Creditor Debtor Rights in Los Angeles for 2022.

Professional Retentions.

The debtors assembled a team to manage the complex bankruptcy:

The various stakeholder groups also retained counsel:

Cash Collateral Disputes.

The Cash Collateral Motion filed on February 28, 2025, was litigated throughout the case. The motion drew 21 references in subsequent filings. 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 disputes over cash collateral reflected a key tension in the case: the properties were generating income, but multiple secured lenders claimed priority interests in that cash, and the partnership disputes made it difficult to establish who should control the funds and for what purposes.

Relief from Stay Motions.

Secured lenders moved to seek relief from the bankruptcy's 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. These motions reflected lender frustration with the bankruptcy process and a desire to liquidate collateral through more direct means.

A Judge's Frustration.

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

Banc of California echoed similar frustrations in court papers, describing how 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. Both dismissal and trustee liquidation were likely to damage portfolio value compared to a negotiated resolution that the parties could not achieve.

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.

The dismissal reflected that the court did not keep the cases in chapter 11. The properties were valued at $382 million on an undistressed basis.

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. The sale process focused on the leasehold interest.

The complex ownership history, ongoing litigation, and leasehold structure affected the sale process.

The receivership sale added additional assets tied to the same operational and ownership structure, packaging together properties that had been held across multiple SPEs.

Bids for Hotel Laguna were due December 11, 2025. The receivership sale liquidated the portfolio's most valuable asset outside the bankruptcy framework.

Regional Bank Fallout

Banking Sector Impact.

The MOM CA Investco case extended beyond the bankruptcy docket into regional bank disclosures. Bad loans reported by Zions Bancorporation and Western Alliance Bancorporation could be traced back to the MOM CA Investco bankruptcy, feeding trading volatility in the regional banking sector.

The California landlord's collapse helped feed regional bank trading volatility. When the troubled real estate firm appeared at the center of banks' latest loan problems, regional bank disclosures highlighted credit quality and exposure to similar situations.

Lender Litigation.

The banks pursued litigation to recover their losses:

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 with MOM CA Investco LLC when the firm filed for bankruptcy, raising questions about why the properties were pledged to multiple lenders.

Industry Implications.

The case shook regional banking confidence and prompted questions about underwriting standards 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.

The case raised questions about due diligence. The overlapping collateral positions suggested that lenders may not have verified priority or investigated whether properties had already been pledged to other creditors.

The case involved partnership disputes, fraud allegations, and a multi-lender capital structure that complicated collateral enforcement.

Key Timeline

Frequently Asked Questions

What was MOM CA Investco?

MOM CA Investco LLC was a joint venture formed in June 2021 between Mohammad Honarkar (through 4G Wireless LLC) and Mahender Makhijani (through Continuum Analytics). The structure held approximately 60 special purpose entities owning luxury 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 collapse 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 overlay of the partner dispute.

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 represented the liquidation of the portfolio's most valuable single asset outside the bankruptcy framework.

How did this affect regional bank stocks?

The MOM CA Investco collapse 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.'"

What are the lessons from this case?

The MOM CA Investco case involved complex joint venture structures, fraud allegations, and multiple lenders with fragmented collateral.

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