Government of Singapore Investment Corp. lost a bid to move forward with a $1.5 billion offer for a group of resorts that hedge fund Paulson & Co. is seeking to restructure.
The Singapore sovereign wealth fund, known as GIC, says the five resorts are putting it and other creditors at risk by prolonging their bankruptcy case and should instead be put up for sale.
U.S. Bankruptcy Judge Sean Lane in New York rejected that argument today, giving the resorts more time to control the bankruptcy so they can pursue restructuring objectives. GIC sought to end that control so it could push ahead with its offer.
“The debtors do get a chance to do what Chapter 11 contemplates,” Lane said at a hearing.
Paulson, a New York hedge fund, and other investors took ownership of eight resorts through a foreclosure earlier this year. Five of the properties, including the Grand Wailea resort in Hawaii and the Doral Golf Resort & Spa in Florida, then filed for bankruptcy protection.
GIC, a creditor in the case that owns $360 million in mezzanine debt, offered $1.5 billion, subject to higher bids at an auction, according to court papers. The bid, offering the resorts a way out of bankruptcy, has been “completely ignored,” GIC said in a court filing.
No ‘Fire Sale’
“This is not a fire sale offer,” Michael Sage, a GIC lawyer, said.
MetLife Inc., another lender, and Midland Loan Services Inc., the servicer of mortgage debt, backed GIC’s effort and called for the resorts to be put up for sale.
GIC is attempting to “disrupt” the bankruptcy and acquire the assets before they rise in value, lawyers for the resorts said in a court filing. The business wants time to complete restructuring efforts to increase value, including a sale of the Doral.
Director Mohsin Meghji testified yesterday that it would be “premature” for the resorts to take the GIC offer now and conduct an auction before pursuing those plans.
“We are basically preordaining a sale and a path that’s premature,” he said.
The case is In re MSR Resort Golf Course LLC, 11-10372, U.S. Bankruptcy Court, Southern District of New York (Manhattan).