Property Tycoon Vincent Tchenguiz to Sue Hotel Chain
Property Tycoon Vincent Tchenguiz to Sue Hotel Chain
Property tycoon Vincent Tchenguiz is set to take legal action against the Hilton hotels chain, after his hotel holdings firm went into administration.
The mogul sent a final letter ahead of action to Hilton Worldwide and two hedge funds, putting them on notice of pending legal issues concerning the portfolio of 10 Hilton hotels that he owns.
Mr Tchenguiz acquired the properties in a sale and leaseback deal in 2002, with Hilton’s leases expiring in 2029, but he is now accusing the hotel group of trying to buy the sites back sooner by frustrating attempts to sell the portfolio and allowing some of the hotels to fall into poor condition.
There has been an ongoing saga of legal conflicts between Hilton and Mr Tchenguiz since they agreed to partner on the hotels in 2002.
In 2014, Mr Tchenguiz won a case on appeal against Hilton for breaching the terms of their lease by reallocating the leases to a smaller, separate subsidiary company rather than the Hilton group itself, in a bid to weaken his rights to financial compensation and get out of any contractual duties in the event that any of the hotels became financially unstable.
In 2016, the property tycoon sued Hilton subsidiaries Adda Hotels and Puckrup Hall Hotel, again for breach of their leases – this time for neglecting upkeep of the hotels – and sought £111m in compensation.
Mr Tchenguiz attempted to sell the collection of hotels that same year for £600m, including the 603-bed flagship UK Hilton in Kensington in west London.
However, with many having fallen into disrepair, no buyers were found for the properties after two years on the market. The company managing the loss-making hotels, Zinc Hotels (Holdings) Ltd. was subsequently put into administration by lenders with a reported £250m of debt.
Hotels group maintains positive stance
Hilton presented a positive front following the move into administration, with a spokesman for the hotels group saying:
“We have been informed of the appointment of AlixPartners as administrators for Zinc Hotels (Holdings) Limited and a further 24 companies within the Zinc Hotels group, taking control of 10 Hilton branded hotels in the UK. These hotels operate under a lease structure, the terms of which are unaffected by the change. The hotels continue to operate and welcome guests as usual.”
They have however yet to comment on the letters of action sent to them by Mr Tchenguiz.
The pre-action letter signifies the last line of proceedings before a lawsuit and blames Hilton Worldwide for deliberately thwarting Mr Tchenguiz’s attempts to sell the hotels, in order to try and buy back the sites at a lower price.
The letter also makes accusations against two hedge funds, Fortress and Hayfin, for allegedly disclosing confidential information about the businessman’s financing arrangements to Hilton.
No stranger to media attention
This is not the first time Vincent Tchenguiz has been the focus of media attention in high-profile legal disputes.
The businessman owns around 300,000 properties in the UK and has become something of a fixture in the courts in recent years, following previous notable cases which include a £2.2bn legal battle with Icelandic bank Kaupthing ending in October 2017, and a successful High Court case against the Serious Fraud Office over their failed investigation of the Icelandic bank’s collapse, during which both Mr Tchenguiz and his brother Robert were investigated and briefly arrested.
In addition, the Tchenguiz Family Trust owns the Citiscape apartment block in Croydon, which is currently awaiting the verdict of a tribunal hearing over who is obliged to pay for £2m replacement work that the residential building requires in order to meet fire safety standards.
The work concerns the building’s cladding, which is of the same, flammable material as was used in Grenfell Tower, and which now must be removed.
The Tchenguiz Family Trust has maintained that it is not their obligation to fund the works, leaving it up to management company FirstPort, which has said apartment leaseholders must foot the bill. The total cost could be between £13,000 and £31,000 per flat.
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