The Dubai-backed nightlife brand takes over the shuttered Bushwick venue after a bankruptcy fight that nearly killed the deal
Demolition crews are at work inside 140 Stewart Avenue.
The Brooklyn Mirage, the 80,000-square-foot outdoor venue complex that has been dark since it failed to reopen last May, is being torn down and rebuilt as Pacha New York, the latest outpost of the Ibiza-born nightclub brand. The first shows are planned for June 2026, with a seasonal run through October. The adjacent Great Hall will operate year-round as a multi-genre live music arena.
FIVE Holdings, the Dubai-based hospitality conglomerate that acquired the Pacha brand for roughly $330 million in 2023, announced the takeover in a press release issued today, February 3. The company said it “has entered into a long-term agreement assuming full operational management of the Brooklyn Mirage and The Great Hall complex.”
The announcement comes one day after the U.S. Bankruptcy Court for the District of Delaware was notified that a settlement had been reached between the venue’s buyer, Axar Capital Management, and the committee of unsecured creditors who had accused Axar of secretly negotiating the Pacha deal and structuring it to cheat them out of money they were owed.
The reopening is significant for the neighborhood, the complex is one of the largest entertainment venues in Brooklyn and a major economic driver for the surrounding blocks of East Williamsburg. But the path from last May’s shuttered gates to today’s announcement ran through a bankruptcy court in Delaware, a leaked deal, a creditor revolt, and a settlement reached just 48 hours ago. Here’s how it happened.
The Collapse
Avant Gardner, the company behind the Brooklyn Mirage, the Great Hall, and Kings Hall, filed for Chapter 11 bankruptcy in August 2025 after the New York City Department of Buildings refused to issue permits for the venue’s planned May 1, 2025 reopening. Inspectors found the $30 million renovation to be “structurally unsafe,” “combustible,” and “illegal.” More than 90,000 ticket holders were left without shows or refunds. Electric Zoo, the electronic music festival run by Avant Gardner subsidiary EZ Festivals, had already been a disaster in 2023, its first day canceled, second delayed, and third marred by gate-rushing.
Axar Capital, a New York-based distressed debt fund led by Andrew Axelrod, had been Avant Gardner’s primary lender. Through the bankruptcy process, an Axar-controlled entity called AG Acquisition 1 LLC purchased Avant Gardner’s assets, with financing from an Axar fund called Strategic III Diversified Growth Fund.
A Global Settlement was approved by Judge Mary F. Walrath in October 2025. Under its terms, unsecured creditors, the unpaid vendors, injured concertgoers, ticket holders, and others, would receive $1.05 million upfront, $750,000 annually for three years, and a contingent value right that would give them a share of the upside if the venue’s value exceeded a certain threshold after the sale.
Judge Walrath called it a “very good deal” at the October 24 approval hearing.
The Leak
On January 1, 2026, Brooklyn Magazine’s Scott Enman broke the news that FIVE Holdings was acquiring Avant Gardner from Axar. The deal was expected to close that day, according to an anonymous source who told BKMag: “This will have a lasting impact on the New York electronic music market, positioning the Dubai-funded Pacha brand to steamroll independent promoters in the city with inflated talent offers even while consumers are still owed refunds from Electric Zoo and canceled Mirage shows.”
FIVE Holdings did not confirm the deal at the time. When the creditors’ committee asked Axar’s lawyers about the BKMag report on January 9, Axar initially said it was “incorrect.” By January 12, the committee learned the deal was “all but done.”
On January 22, the global law firm Greenberg Traurig publicly announced that it was advising FIVE Holdings on the acquisition, with a team spanning Abu Dhabi and New York, the first quasi-official acknowledgment that the deal was real.
The Fight
By late January, the creditors’ committee had seen enough. In filings reviewed by Bushwick Daily, the committee accused Axar of negotiating the FIVE Holdings arrangement “under the cover of darkness,” alleging the deal was structured to make the contingent value right, the creditors’ mechanism for sharing in the venue’s future success, “valueless from its inception.”
The Real Deal reported that the FIVE Holdings deal included a purchase option that, if exercised, “would wipe out a potential payout to the unsecured creditors.”
The committee withdrew its support for the bankruptcy plan and filed sealed and redacted statements with the court outlining its allegations. Axar responded by filing a motion asking the court to declare that the committee was “unreasonably withholding” consent.
Bloomberg Law first reported the committee’s withdrawal of support on January 28. BKMag published a detailed account of the allegations on February 2 under the headline “Pacha’s Brooklyn Mirage Takeover Gets Caught Up in Court.”
Axar’s counterargument, as reported by BKMag, was that the firm faced at least $17 million in Chapter 11 exit costs, $2 million per month in carrying costs for the shuttered venues, and $1.5 million for demolition, and that no other party had submitted a higher valuation than FIVE Holdings. Axar said it was taking a $30 to $40 million loss on the deal.
The Resolution
On February 2, the same day BKMag’s article published, attorneys for all three sides filed Docket No. 570 in Case No. 25-11446, a joint notice announcing an “Agreement in Principle Resolving All Chapter 11 Plan, Sale, and CVR Motion Issues.”
The four-page filing was signed by counsel for the debtors (Young Conaway Stargatt & Taylor), Axar (McDermott Will & Schulte), and the creditors’ committee (Orrick Herrington & Sutcliffe and Morris James). Under the agreement, Axar withdrew its motion accusing the committee of unreasonably withholding consent. The committee withdrew its notice pulling support for the plan and its sealed accusations of trickery. All withdrawals were “without prejudice,” meaning either side can reassert its position if the final documentation falls apart.
The filing describes the settlement as resolving “objections of the Committee to certain transactions disclosed to the Committee during discovery involving the Axar Parties and their counter-party which, following the closing of the Sale, will operate the business of the Purchaser.”
FIVE Holdings is never named in the court filing. Neither is Pacha.
The specific terms of the revised settlement, what the creditors actually won, have not been disclosed. The agreement says definitive documentation must be “in form and substance reasonably acceptable to each of the Global Settlement Parties.” A confirmation hearing for the bankruptcy plan is expected February 12, according to The Real Deal.
What’s Coming to Stewart Avenue
Today’s press release fills in the operational details.
Pacha New York will open for its first season in June 2026, running through October. FIVE Holdings described the programming as placing “international headliners and homegrown talent on the same stage,” promising Grammy-winning performers and “large-scale shows rarely seen in New York City.” The press release pledges “ongoing partnerships with local artists, collectives, and promoters.”
Sources familiar with the plans told Pollstar that the 2026 season will be a stripped-down version of the venue, closer to the Brooklyn Mirage’s original 2015 open-air design, with the ambitious LED-wrapped rebuild potentially pushed to 2027. The Brooklyn Mirage had previously announced plans for a fully kinetic shutter system, a 270-degree LED screen with 30,000 resolution, and more than 100 speakers placed throughout the venue. Those plans appear to be on hold.
The Great Hall, the indoor venue in the complex, will continue to operate year-round as a multi-genre arena.
Demolition of the existing Mirage structure reportedly began February 2. An NYC Department of Buildings Temporary Place of Assembly Certificate application has been filed requesting activation by June 1.
“After supporting Avant Gardner through a challenging period in 2025, we are pleased to have achieved an agreement in principle with the Committee of Unsecured Creditors resolving all material matters related to the Chapter 11 plan and sale transaction,” said Andrew Axelrod, CEO of Axar Capital, in the press release.
“New York, the financial and cultural capital of the world, represents more than a market expansion for FIVE and Pacha; it marks a defining moment in our global journey,” said Kabir Mulchandani, Chairman and CEO of FIVE Holdings.
The People Behind It
FIVE Holdings is a Dubai-based conglomerate chaired by Kabir Mulchandani, an Indian-born entrepreneur. The company’s portfolio spans luxury hotels in Dubai, Zurich, and Ibiza, along with branded residences, fashion lines, and entertainment venues. The company describes its portfolio as valued at nearly AED 13 billion, roughly $3.5 billion. In the first half of 2025, FIVE Holdings reported revenues of $298 million and EBITDA of $105 million.
Mulchandani was arrested in Dubai in 2009 on charges of fraud and embezzlement. He spent 140 days in jail before being cleared of all charges.
The Pacha brand itself has New York history. Pacha NYC operated a venue at 618 West 46th Street in Hell’s Kitchen from 2005 until it closed in January 2016, citing rising operating costs and competition.
Axar Capital, which retains ownership of the venue through its acquisition entity AG Acquisition 1 LLC, is a New York-based investment firm specializing in distressed debt. The operational arrangement, in which Axar owns and FIVE operates, is more comparable to a hotel management agreement than a straightforward sale.
What Remains Unanswered
The deal is not final. The Agreement in Principle filed February 2 must be translated into binding documentation before the February 12 confirmation hearing. The specific concessions made to unsecured creditors have not been disclosed.
The adversary proceeding filed by merchant cash advance lenders TVT Capital, Insta Funding, and Pinnacle Business Funding against Axar, Axelrod, and Avant Gardner board members, alleging $11 million in loans based on misrepresented financials, remains active and is not covered by the settlement.
The six debtor entities in the bankruptcy, AGDP Holding Inc., Avant Gardner LLC, AG Management Pool LLC, EZ Festivals LLC, Made Event LLC, and Reynard Productions LLC, are jointly administered under Case No. 25-11446 before Judge Walrath in the District of Delaware.
The over 90,000 ticket holders who were left without shows or refunds when the venue failed to reopen in May 2025 remain unsecured creditors in the bankruptcy. What they ultimately receive depends on the final settlement terms.
For a neighborhood that has lived with the Mirage’s booms and busts since 2017, the venue is coming back. Whether it comes back in a way that makes whole the people it harmed on the way down is a question the court filings haven’t yet answered.
Bushwick Daily will continue reporting on the Avant Gardner bankruptcy proceedings and the Pacha New York opening as court filings and additional documentation become available.
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