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Billionaire Burkle Sued by Hotel Partner Over Alleged 'Coup'

Updated on
  • Real-estate investor Zobler says Burkle trying to remove him
  • Suit says Burkle threatened to go ’thermonuclear’ over post

Billionaire Ron Burkle is accused in a lawsuit of trying to stage a coup to oust his partner from the chief executive post of a boutique hotel-development venture so he can use the company for his own benefit.

Burkle and real estate developer Andrew Zobler teamed up more than a decade ago to develop, promote and operate boutique hotels. Their Sydell Group manages properties including the NoMad in New York, the LINE Hotel in Los Angeles and the Freehand hotels in Chicago, Miami and Los Angeles.

Ron Burkle

Photographer: Chip Somodevilla/Getty Images

An entity partly controlled by Zobler says that Burkle has sought to replace him and install his own hand-picked chief executive. He threatened at a meeting in Los Angeles on Monday to "go thermonuclear" on Zobler if he tried to get in the way, according to the lawsuit filed Tuesday in state court in Manhattan.

"Burkle explained that he believed his equity investments in certain hotel projects were ’getting screwed’ by Zobler’s efforts to grow the company and partner on new projects with other hotels not affiliated with Burkle," according to the lawsuit. He also made it clear he wants to use the company to benefit his other business interests, according to the complaint.

Burkle, 64, is the co-owner of the National Hockey League’s Pittsburgh Penguins, chairman of Relativity Sports LLC and co-owner of Ralphs Grocery Co.

Zobler did a good job of managing the first few hotels owned by Burkle and his Yucaipa Cos. but became "overwhelmed" by growth over the last few years, Sallie Hofmeister, an outside spokeswoman for Burkle, said in a statement.

"Mr. Zobler had recently agreed that it was time for him to step down as CEO and focus on what he is good at by becoming chairman and chief creative officer, but apparently decided instead to file these claims, which will be proven in court to be without merit," Hofmeister said.

Burkle has increasingly sought to use the hotel venture for his own benefit, occupying a "palatial" 2,500-pound-a-night suite at The Ned hotel in London without paying since April, according to the lawsuit. He has also refused to consent to a hotel development and management agreement so he can negotiate favorable terms for his own personal stake in the underlying property, Sydell claimed. Hofmeister said it was "comical" for Zobler to say Burkle can’t occupy rooms in a property he personally owns.

Sydell is seeking a court order to preserve the status quo pending a determination from an arbitrator on its request for an injunction blocking Burkle’s "ongoing and threatened conduct."

The case is SM Sydell Hotels LLC v. Yucaipa U.S. Hospitality Partners Holdings Inc., 656028/2017, New York Supreme Court, New York County (Manhattan).

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