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In appeal over busted $5.8 bln hotel deal, Anbang throws shade at Greenberg Traurig

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The headquarters of Anbang Insurance Group in Beijing, China. REUTERS/Jason Lee

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(Reuters) - Last December, when Vice Chancellor Travis Laster of Delaware Chancery Court ruled that South Korea’s Mirae Asset Capital Co was entitled to ditch a $5.8 billion agreement to buy 15 luxury hotels from a successor to China’s Anbang Insurance Group Ltd, the judge savaged Anbang’s lawyers from Gibson, Dunn & Crutcher for allegedly deceiving Mirae about a bizarre scheme to fabricate false deeds to some of the hotels.

On Wednesday, when Anbang’s new lawyers from Wachtell, Lipton, Rosen & Katz ask the Delaware Supreme Court to overturn Laster’s decision in AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC, they’re going to try to shift the court’s attention to Mirae’s counsel from Greenberg Traurig.

It’s an audacious bit of deflection. According to Anbang’s appellate briefs, Laster wrongly accused the company and Gibson Dunn of committing "fraud about fraud" by downplaying the risk posed by fraudulent deeds forged by an alleged trademark troll. Gibson Dunn didn't need to tell Mirae every detail about its work to squelch the fraudulent deeds, which were such obvious fakes that they "might as well have been drafted in crayon," Wachtell said.

If there was untoward conduct, Anbang asserted, it was instead by Mirae's lawyers at Greenberg Traurig. Anbang's briefs claim that Greenberg improperly lobbied title insurers to restrict their coverage in order to get the firm's remorseful client out of the deal. Delaware’s Supreme Court, Anbang insisted, cannot allow Mirae to benefit from its lawyers’ breach of their obligation to keep the acquisition on track.

“No inferences are necessary here,” Wachtell wrote in Anbang’s reply brief. “Uncontested evidence shows that (Greenberg Traurig) tried to manufacture a way for Mirae to avoid closing.”

Greenberg partner Robert Ivanhoe, who bears the brunt of Anbang’s accusations, referred my query about the appeals to a Greenberg spokesperson. She declined to comment.

But it’s important to keep in mind that Anbang previously tried – and abjectly failed – to persuade Laster that Ivanhoe had deliberately sabotaged the deal to save Mirae from buying hotels whose business was decimated by the pandemic. The vice chancellor, as I reported in December, completely exonerated Ivanhoe, whom he found to be a candid, honorable witness at trial. At the time, Ivanhoe told me he considered Laster’s decision to be vindication. “(Anbang and Gibson Dunn) attempted to pin their case on what they asserted was my improper behavior,” Ivanhoe said in December. “Instead, it was Gibson Dunn’s conduct that was put under the spotlight and found to be improper.”

I should point out that the Anbang appeal will also address a critical Delaware legal question about a seller’s contractual obligation to operate in the ordinary course when it is faced with extraordinary circumstances. Mirae agreed to acquire the Anbang hotels before the COVID-19 pandemic, but by the time the deal was scheduled to close, many of the resorts had severely curtailed operations, laying off thousands of workers. Anbang said it had taken reasonable steps to respond to the pandemic but Laster held it had breached the deal contract by deviating dramatically from routine operations without obtaining Mirae’s consent.

That holding has been controversial. Anbang urged the Delaware justices to reverse it, arguing that Laster’s interpretation has created unpredictability for M&A participants and will lead to gamesmanship by remorseful buyers. Mirae’s lawyers at Quinn Emanuel Urquhart & Sullivan, of course, countered in their Delaware Supreme Court brief that the vice chancellor correctly applied Delaware precedent to the deal contract between Anbang and Mirae.

Laster found that the title insurance problem was an independent justification for Mirae to walk away. I’m focusing on that dispute because ... well, because it’s just so odd.

According to the trial judge’s decision last December, Anbang has long been under siege by an alleged trademark troll known as Andy Bang, who also came up with a scheme to claim ownership of some of Anbang’s hotels. Bang allegedly forged deeds and other ownership documents, then went to Delaware Chancery Court to procure judgments based on the fraudulent documents.

Anbang and Gibson Dunn were aware of Bang’s alleged scheme, including the Delaware litigation, but left Mirae and Greenberg Traurig in the dark as the deal was being negotiated, the judge found. (Laster also concluded that Gibson Dunn misled him about the extent of its investigation of the Bang scheme.) Mirae said it only learned about the Delaware litigation over the fraudulent deeds when lawyers for one of its lenders ran across the case in due diligence.

As you can imagine, title insurers were spooked about the fake deeds, despite Gibson Dunn’s reassurances that the purported ownership documents were patently fraudulent. Mirae, according to Anbang, realized that the insurers’ hesitation was an opportunity to renegotiate deal terms or abandon the agreement to acquire properties that were suffering mightily in the pandemic. Anbang’s appellate briefs claim that Greenberg Traurig partner Ivanhoe operated a “back-channel text-messaging campaign to torpedo (title insurance) coverage for the deeds.”

Ivanhoe admitted in trial testimony before Laster that when title insurance officials asked him during a conference call in April 2020 what he would do if he were in their shoes, Ivanhoe said he would write a policy that included an exception for the fraudulent deeds.

That exception, however, would tank the deal, which included a title insurance requirement. Anbang said Ivanhoe’s advice to title insurers was proof that he had breached his obligation to keep the deal rolling toward its scheduled closing date.

Mirae’s Quinn Emanuel lawyers countered that Ivanhoe’s duty was to be honest with the title insurers so they could not later allege that Mirae had duped them into providing coverage. The Greenberg lawyer, Quinn said, also reminded insurers that they could revise coverage once Anbang put the fake deed problem entirely to rest. Even Anbang’s title insurance expert, Quinn argued in its brief, testified that Ivanhoe’s communications with the title insurance executives were appropriate.

The trial judge, Laster, credited that testimony, as well as Ivanhoe’s own candor, in his determination that Ivanhoe did not breach his duty. If Gibson Dunn had been as forthright as Ivanhoe, Laster said, the acquisition might never have been derailed.

We’ll see Wednesday if the Delaware justices think Laster directed his glare at the wrong firm.

Opinions expressed here are those of the author. Reuters News, under the Trust Principles, is committed to integrity, independence and freedom from bias.

Read more:

Chancery's DecoPac opinion shows 'ordinary course' breaches will remain extraordinary

Delaware judge excoriates Gibson Dunn in Anbang/Mirae busted deal ruling

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. A Dartmouth college graduate, she has worked as a journalist in New York covering the legal industry and the law for more than three decades. Before joining Reuters, she was a writer and editor at The American Lawyer. Frankel is the author of Double Eagle: The Epic Story of the World’s Most Valuable Coin. Reach her at alison.frankel@thomsonreuters.com

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