The Ritz-Carlton luxury resort and high-end residential developments in the Cayman Islands were placed into receivership this week because of an outstanding $250 million loan.
RC Cayman Holdings LLC, which is registered in Delaware, appointed KPMG (Cayman) as the receiver of the group of four companies, which had developed and owned the five-star hotel and residential developments, effectively wresting control from its chairman and chief executive, Michael Ryan.
The 365-room oceanfront Ritz-Carlton opened on Grand Cayman Island in 2005 and was the first and only five-star hotel in the British Caribbean territory.
In the last several months, Ryan had been trying to renegotiate $7.5 million in deferred import duties owed to the Cayman government as part of its discussions with its primary lender, RC Cayman Holdings, according to correspondence with the Financial Secretary released under a Freedom of Information request.
Ryan blamed the global economic downturn and escalating construction costs in the Cayman Islands as the driving factors for his inability to meet his obligations.
"We are now operating in an extremely difficult economic environment," Ryan said in a January letter.
The receivership appointment followed a civil suit filed by RC Cayman Holdings in the Grand Court last month seeking an injunction against Ryan's executive team.
KPMG joint receiver Keith Blake said the receivership was a "private contractual matter" independent of the courts but would not elaborate.
While Ryan's companies own the 144-acre property, The Ritz-Carlton Hotel Co. manages the resort operations and would not be affected by the receivership, according to a KPMG statement.
In the last year, Ryan has laid off a significant number of staff as cash flow continues to stall his new Dragon Bay property, an upscale residential development on Grand Cayman targeting millionaires.
RC Cayman Holdings' loan had been issued by the Royal Bank of Scotland in 2001. The outstanding loan amount of $161 million was then sold to Column Financial Inc., a New York subsidiary of Credit Suisse, and increased to $250 million before it was sold to RC Holdings nearly a year ago.
Just a few days before the receivership was announced, Ryan said in another letter that he was working on an agreement with RC Holdings that would allow it "to meet its obligations, preserve its maximum value and lead to the least possible impact on the hotel's image of the Cayman Islands."
(Reporting By Shurna Robbins; editing by Mark Porter)
Reuters
