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
Why Secured Transactions Are Important
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Author: Dan Brecher
Don’t Cash a “Paid in Full” Check Without Understanding the Legal Implications
Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Author: Dan Brecher
Changes to Qualified Small Business Stock Will Benefit Startup Founders and Investors
The One Big Beautiful Bill Act of 2025 (OBBBA) significantly impacts federal taxes, credits, and deductions. A key change relating to Qualified Small Business Stock (QSBS) allows greater tax-free gains for investments in startups and other qualifying small businesses. Company founders and other investors should understand how the enhanced tax strategy works or risk missing […]
Author: Dan Brecher
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Author: Dan Brecher
What is Business Law and Why Is it Important?
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Author: Dan Brecher
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
Author: Dan Brecher
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.