Jan 10 The United States government has objected
to the reorganization plan of a group of bankrupt hotels owned
by hedge fund Paulson & Co, saying it was an attempt to dodge
The MSR Resort group's plan to sell itself to the Government
of Singapore Investment Corp creates tax liabilities of $331
million with no recourse for the Internal Revenue Service (IRS)
to recover them, Preet Bharara, U.S. attorney for the Southern
District of New York, said in his objection filed on Wednesday.
Bharara also objected to MSR seeking an injunction that bars
the government from reviewing the tax consequences of the plan.
The government has not had an opportunity to examine whether
the plan is motivated solely to avoid taxes, which would
disqualify it, Bharara said.
The Government of Singapore Investment Corp bid
$1.5 billion for the hotels group, including the Arizona
Biltmore Resort & Spa in Phoenix and Grand Wailea Resorts Hotel
& Spa in Hawaii, in August.
GIC is a sovereign wealth fund that manages Singapore's
foreign reserves and is a large real estate investor in the
United States. The fund is a lender to MSR and made an offer for
shortly after the group filed for bankruptcy protection.
The hedge fund, headed by John Paulson, bought the hotels
from a Morgan Stanley real estate fund in January 2011
and put them into bankruptcy a month later, saying it planned to
Morgan Stanley Real Estate purchased the five hotels and
three others in 2007 for about $4 billion. The hotels filed with
$2.2 billion in assets and $1.9 billion in debt.
The case is in Re: MSR Resort Golf Course, U.S. Bankruptcy
Court, District of Delaware, No. 11-10372.