NY developers suing Anglo

Two New York developers are suing State-owned Anglo Irish Bank for $1 billion (€750 million) in a dispute over funding for three luxury hotels in the city’s Manhattan district.

Developers Simon Elias, Izak Senbahar and a number of their companies, are suing Anglo for $1 billion plus interest and costs for breach of a series of agreements relating to $500 million worth of loans that the bank made to the men and their companies to redevelop three Manhattan hotels, the Mark, Alex and Flatotel.

The bank would not comment yesterday, but sources close to it said it intends to defend the lawsuit vigorously and believes that the plaintiffs' case has no merit.

According to documents lodged with the New York courts, the case centres on 14 loans totalling more than $500 million that the bank gave to Mr Elias, Mr Senbahar and a number of their companies, which are part of their Alexico group.

Close to $270 million of the total relates to the Mark Hotel, a prestige property on Manhattan's upper east side.
Anglo has reportedly been trying to sell on this debt for as little as $200 million.

The others relate to the Alex and Mark hotels. Anglo sold the debts relating to these properties in July to
a group of companies registered in Delaware, known as RPAP.

Mr Elias and Mr Senbahar claim this is in breach of their agreements with Anglo, as they say that RPAP's backers are the Procaccianti group, a hotel management firm, Atlas Securities and Rock Point, all of which are competitors of the plaintiffs.

They claim the Irish bank secretly entered talks with these companies earlier this year to sell the loans to them.

Mr Elias and Mr Senbahar also argue that Anglo's attempts to sell the Mark Hotel debt are in breach of its agreement with the bank.

The plaintiffs say Anglo's original agreement was that it would treat the three hotels as a single business, and allow them time to redevelop the Mark Hotel and sell a series of refurbished suites in the property before seeking repayment of the loans.

The RPAP companies are now seeking repayment of the debts due on the Alex and Flatotel, and are threatening the owners with foreclosure.

This is the subject of a separate legal action. Anglo has offices in New York and it loaned cash to US developers and several high-profile property projects in the city.