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GIC gains apparent advantage in legal tussle
Aug 17, 2012
by Cheryl Tay The Government of Singapore Investment Corporation (GIC) appears to have gained the upper hand in a legal battle with US funds over four luxury resorts. GIC, a major creditor to the resorts, recently submitted documents to New York's federal bankruptcy court, alleging that Winthrop Realty Trust and hedge fund Paulson & Co had missed an interest payment on the properties' debt. According to the Wall Street Journal, missing the payment will trigger an auction. The properties, including the 796-room La Quinta Resort & Club PGA West (pictured) in California and the 780-room Grand Wailea Resort Hotel & Spa in Hawaii, have been operating under the protection of the bankruptcy court for 18 months, after the previous owners failed to pay US$1.5 billion (S$1.877 billion) in mortgages. Winthrop and Paulson had gained control of the properties in January 2011 and placed them under the bankruptcy court to restructure the assets and pay off creditors, while avoiding an auction. However, GIC and other large creditors were growing impatient. GIC, which holds around US$400 million (S$496 million) of the mezzanine debt of the properties, proposed a solution by offering US$1.5 billion (S$1.877 billion) cash and debt for the luxury resorts in February 2011. However, the court gave Paulson more time to implement the restructuring exercise. The Wall Street Journal noted that Paulson had promised to refinance the properties' debt and pay off the creditors by 1 September 2012. But because the funds had allegedly failed to pay the interest payment in August, it allowed GIC to force an auction on the said assets. A court judgment on the auction is expected by year-end.
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