(Corrects to remove reference to Paulson in first paragraph,
Jan 10 The United States government has objected
to a bankruptcy reorganization plan that calls for the sale of
MS R Resort hotel group to a Singapore sovereign wealth fund,
s aying it is an attempt to dodge taxes.
The plan 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 an 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 U.S. 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. The hotel group is owned by the
hedge fund Paulson & Co.
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
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, Southern District of New York, No. 11-10372.
(Reporting by Tanya Agrawal in Bangalore; Editing by Sriraj