Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Hedge Fund's Real Estate Unit Placed into Bankruptcy to Avoid Litigation
Author: Joel R. Glucksman
Date: May 24, 2013
Key Contacts
Back
Hedge fund billionaire John Paulson has placed the real estate unit of his hedge fund into bankruptcy to avoid litigation, including a costly lawsuit brought against it by a lender.
Five Mile Capital Partners recently brought a suit against executives of Paulson’s MSR Hotels & Resorts Inc. – the real estate arm of Paulson & Co. – claiming that it is owed tens of millions of dollars relating to the 2011 asset sales of four bankrupt resorts. The resorts in question are Arizona Biltmore Resort & Spa in Phoenix; the La Quinta Resort & Club PGA West in La Quinta, California; the Grand Wailea Resort Hotel & Spa in Maui, Hawaii, and the Claremont Resort & Spa in Berkeley, California. They were sold to the Government of Singapore Investment Corp. for a total of $1.5 billion.
The lender, which lent MSR $50 million, alleges that the Paulson executives failed to get the best price for trademarks, logos and other intellectual property, according to Reuters. Five Mile’s lawsuit sought damages for breach of fiduciary duty, gross negligence, and corporate waste, the news source added.
In response, MSR is seeking bankruptcy law protection under Chapter 11 of the Bankruptcy Code in a Manhattan courtroom, a move that is intended to prevent litigation against a debtor from going forward. The real estate unit also said it plans to use Chapter 11 proceedings to sell intellectual property relating to the Biltmore, La Quinta, and Grand Wailea resorts, Reuters explained.
Daniel Kamensky, MSR Hotels’ treasurer and partner at a Paulson affiliate, said Five Mile began a “scorched earth assault” on the MSR directors and created complications in what would have otherwise been an “orderly sale and wind-down process,” according to Bloomberg.
“The REIT now seeks to end Five Mile’s continued terrorization of directors that the court has previously found acted in good faith,” said Kamensky.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
New Jersey’s Revised UHAC Regulations: What Residential Developers Need to Know About Affordable Housing Commitments
New Jersey residential developers with affordable housing obligations should carefully review their existing approvals, development agreements, and proposed deed restrictions in light of the State’s revised UHAC regulations (Uniform Housing Affordability Controls). The regulations, which took effect on November 6, 2025, significantly change the administration and physical requirements for affordable housing units. For developers with […]
Author: Wendy Rubinstein Quiroga
“No Comment” Culture: Why Silence Is Often the Riskiest Legal Strategy
A “no comment” response is sometimes the right call when a legal problem arises. As a blanket policy, however, it lets allegations go unanswered, deadlines pass, evidence disappear, and manageable disputes grow into expensive litigation. The businesses that fare best are usually the ones that say little publicly while acting decisively behind the scenes. When […]
Author: Sean M. Pena
Utility-Scale Battery Storage Projects: A Legal Roadmap for Developers, Property Owners and Other Stakeholders
Utility-scale battery energy storage systems (BESS) are becoming an increasingly important component of the electric grid throughout New Jersey, New York, and Pennsylvania. As renewable generation expands, electricity demand increases and grid operators seek greater flexibility, battery storage can help balance supply and demand while providing additional capacity and reliability. For developers, battery storage presents […]
Author: Nicholas Wall
Navigating Disputes: Hire a Partnership Dispute Lawyer
A falling out between partners can be disastrous for any business. In many cases, the partnership will not survive. If you are in an unworkable situation with your partners, it may be time to consult a partnership dispute lawyer experienced in handling partnership breakups and dissolutions before the situation deteriorates any further. It is easy […]
Author: Jay McDaniel
Section 363 Sales in Bankruptcy: What Businesses, Lenders, and Buyers Need to Know
When a company enters Chapter 11 bankruptcy, many assume the process will culminate in a lengthy reorganization plan. However, distressed businesses are increasingly being sold through a different mechanism — a sale under Section 363 of the United States Bankruptcy Code. A Section 363 sale allows a company, as a debtor-in-possession in bankruptcy, to sell […]
Author: John D. Giampolo
Zoning Laws Explained: What You Need to Know Before Buying Property
Before buying property, it is critical to determine whether local zoning laws may affect your plans. If you plan to redevelop the property, you will want to confirm that local zoning regulations permit development as intended. If acquiring property that is already developed, you must verify that the use is permitted in the underlying zoning […]
Author: Wendy Rubinstein Quiroga
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.