Singapore call on collapsed fund manager i-Prosperity
A Singapore-based investment group has taken legal action to recoup the $15m it put into a fund.
The collapse of property fund manager i-Prosperity Group has been complicated by a group of Singapore-based investors looking to recoup $15m from a failed $200m-plus hotel deal the company was orchestrating.
The Michael Gu-run firm leapt to the forefront of Australia’s hotel industry last year as it claimed to have bought the AccorInvest hotel portfolio spanning about 23 small hotels, including 17 freeholds and six leaseholds.
But a Singapore-based investment group that had backed the deal, which did not go ahead after i-Prosperity failed to settle by the end of May, has taken legal action to recoup the $15m it put into a fund to own the freehold hotels that were to be purchased.
The claim has been made in the NSW Supreme Court, via law firm Clayton Utz, with court documents obtained by The Australian showing Singaporean investors associated with Octava claiming the money was only to be applied to the hotel purchase.
They filed claims saying they agreed last November to back the IPG Opportunities Fund, which was to receive the money to help buy the portfolio of 17 Ibis-branded freehold metropolitan and regional budget hotels.
A $1.5m commitment fee was payable and the balance was to be used to help settle the portfolio. But if the deal was not done by the end of May then the monies would be repayable.
The Singaporean investors paid $10.2m to the i-Prosperity Pty Ltd unit and $4.8m to i-Prosperity Capital Management Pty Ltd, pending settlement on the Accorinvest portfolio.
After the deal did not complete and despite demands from the Singaporeans, the i-Prosperity units failed to repay them and “have not confirmed the balance, location or investment status of the monies paid”, according to court filings.
The failed deal has generated other litigation and Mr Gu was last week, in a separate court case, ordered to pay $6.1m to two people who had loaned i-Prosperity money to help undertake the hotel purchase.
i-Prosperity last September also claimed the backing of another Asian fund manager, ZACD Group, in buying the AccorInvest freeholds for $212.6m. ZACD was raising a $45m fund but could not be reached for comment.
The deal was to be one of the country’s largest hotel transactions and it spanned 3046 rooms across Accor brands comprising MGallery, Novotel, Mercure, Ibis and Ibis Budget. The hotels are in Brisbane, Sydney, Melbourne, Canberra, Perth and regional NSW.
The i-Prosperity empire collapsed into administration last week on Thursday night.
Administrator Cor Cordis declined to comment on Sunday but said last week it was focused on stabilising the i-Prosperity Group and commencing a full and thorough investigation into its affairs, including certain court proceedings that remain on foot.
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