By Joseph Checkler
4-traders.com
The U.S. has a $331 million problem with the sale of a group of luxury resorts to the government of Singapore.
Preet Bharara, U.S. Attorney for the Southern District of New York, said in court papers that MSR Resort Golf Course LLC’s plan to sell its resorts to the real-estate arm of Singapore’s sovereign wealth fund creates $331 million in tax liabilities that should be owed to the Internal Revenue Service but can’t be collected
Mr. Bharara’s argument is that MSR’s $1.5 billion sale of four resorts to the Singapore fund, GIC RE, creates $331 million in taxable gains that should be automatically owed to the IRS. The problem, though, is that the documentation surrounding the purchase agreement contains wording that would stop the IRS from collecting on the taxes.
Mr. Bharara’s filing comes on the heels of a similar objection by investment firm Five Mile Capital Partners LLC, a key adversary of MSR throughout the bankruptcy case. Five Mile, a junior lender that stands to recover none of its money in the case, said the liability could “infect” the entire bankruptcy.
In December, no one bid against Singapore at a scheduled auction of the resort group’s properties: Maui’s Grand Wailea Resort Hotel & Spa, the La Quinta Resort & Club in La Quinta, Calif.; the Arizona Biltmore in Phoenix; and the Claremont in Berkeley, Calif.
