Anglo Irish Bank is being sued for $1 billion by two New York developers who say the bank breached their agreement over funding for three luxury hotels located in Manhattan, according to the Irish Times.
The developers Simon Elias and Izak Senbahar, as well as a number of their companies, are suing the bank for breach of a series of agreements regarding 14 loans totaling $500 million the bank made to the men and their companies, which are part of their Alexico group, to redevelop three hotels, the Mark, Alex and Flatotel.
More than half of the total amount, $270 million, relates to the Mark Hotel, located on the Upper East Side. Anglo allegedly tried to sell on this debt for $200 million, which the plaintiffs are saying is in breach of their agreement.
The bank sold the debts relating to the other properties in July to RPAP, a group of companies registered in Delaware.
Elias and Senbahar are claiming that this is in breach of their agreements with Anglo, as RPAP is backed by the Procaccianti group, a hotel management firm, Atlas Securities, and Rock Point, all of which are their competitors.
The original agreement, say the plaintiffs, was that Anglo would treat the three hotels as a single business and give them time to 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 threatening the owners with foreclosure if they do not repay the debts due on the Alex and Flatotel.
Anglo Irish would not comment, but sources say the bank will defend the lawsuit and believes the developer’s case has no merit.