Gary Melius, the owner of the historic Oheka Castle, has filed for Chapter 11 bankruptcy protection in an attempt to halt a foreclosure sale of the property scheduled by its lender. The case was filed on July 31 in the U.S. Bankruptcy Court for the Eastern District of New York, revealing that Melius’s entity, Kahn Property Owner, faces $63 million in debt against $92.8 million in assets, primarily tied to the castle and its 22-acre grounds.
The lender, Taconic Capital, purchased the defaulted mortgage note for the castle for approximately $25 million earlier this year. Melius had a history of financial struggles with the property, having previously defaulted on a $28 million commercial mortgage-backed securities loan over a decade ago. The debt has since ballooned to around $50 million due to interest and advances.
In an effort to maintain control over his property, Melius plans to navigate through Chapter 11 while finalizing plans for a multi-year luxury condominium development. This move comes after the Huntington Town Board approved Melius’s proposal to build a 95-unit condo building on part of the castle’s property. Meanwhile, Taconic has entered a contract to purchase the adjacent Cold Spring Country Club, looking to resurrect a project for 175 condos that was previously under consideration.
Despite the ongoing financial disputes, Melius remains dedicated to preserving the castle, which he has transformed from a state of abandonment into a premier venue for events over the years, investing $46 million in renovations. The castle’s storied history includes once serving as a retirement home for municipal employees and later as a military academy before Melius took ownership.
This recent bankruptcy filing marks another chapter in the long and tumultuous saga of Oheka Castle, which is not only a popular event venue but also recognized on the National Register of Historic Places. Melius, now 80 years old, continues to fight to retain this historical landmark, underscoring his personal investment and emotional bond with the property.
Overall, this situation highlights the challenges of balancing financial obligations while preserving cultural heritage, as Melius strives to secure a future for Oheka Castle and its surrounding developments.