A Rare Ray Of Light For UCC Borrowers–But Will It Last?

In a significant order issued this afternoon, Justice Andrea Masley of the New York Supreme Court, Commercial Division, imposed a temporary restraining order slamming the breaks on the scheduled UCC sale of the membership interests in Worldwide Plaza, a 49-story office skyscraper located at 825 Eighth Avenue in Manhattan. Justice Masley adjourned the sale to January 29, 2026 to allow for further briefing on whether the sales process conducted by the lender, an Extell affiliate, was commercially reasonable. The case is WWP Mezz LLC v. WWP Mezz Investment Company LLC, Index No. 650135/2026.

Justice Masley's order may have important implications for UCC borrowers facing foreclosure. In its seminal 2021 decision in Shelbourne BRF LLC v. SR 677 Bway LLC, 192 A.D.3d 444, 444 (1st Dep't 2021) the New York Supreme Court, Appellate Division, First Department, held that the potential loss of an investment in real property does not constitute the "irreparable harm" necessary to obtain a temporary restraining order, stating "the feared loss of an investment can be compensated [instead] in money damages." Since Shelbourne, New York courts have consistently rejected attempts by borrowers to stop UCC sales based on commercial unreasonableness.

In an effort to sidestep Shelbourne, the borrower in the Worldwide Plaza case, an affiliate of SL Green and RXR, pointed to specific language in its loan agreement preventing it from recovering money damages. Accordingly, the borrower argued, the only relief it could possibly obtain was injunctive relief, in the form of a temporary restraining order. The borrower also argued that Article 9 of the New York Uniform Commercial Code permits a court to impose an injunction even if irreparable harm is not fully established.

By imposing the temporary restraints requested by the borrower, Justice Masley has offered New York UCC borrowers hope that Shelbourne may not apply to every sale. However, it remains to be seen whether Justice Masley will extend the temporary injunction past January 29, 2026. Furthermore, if the order is appealed by Extell, the Appellate Division will itself decide whether its holding in Shelbourne applies with equal force to the Worldwide Plaza sale, or whether the borrower has valid arguments that Shelbourne is different. We suggest that commercial lenders and borrowers track the developments in this case, which may establish precedent about the rights and remedies of the parties when a UCC sale is challenged.

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