Dajia -- which assumed the assets of struggling Chinese insurer
The buyout is among nearly 20 transactions that have fallen apart over the last two months, spurring court filings as valuations cratered on government-enacted lock downs. Already, more than
The Mirae deal portfolio of luxury hotels, which Anbang acquired via its acquisition of
Mirae officials had asked the Beijing-based insurer for more time to close the deal because the required debt financing isn’t immediately available,
Mirae officials contend one of the reasons they called off the acquisition was the discovery that some hotel titles had been improperly recorded with the wrong owners, Dajia said in the suit. In the course of preparing the deal, Dajia officials said they discovered a group of California businessmen had submitted phony titles for six of the hotels involved in the Mirae deal. Dajia executives disclosed their findings to their Mirae counterparts and moved to retitle the properties, the suit said.
The California group also attempted to enforce $180 billion in fictitious arbitration claims in Delaware and California, Dajia officials noted in the suit. The courts ultimately refused to honor the awards. Dajia said it informed Mirae about the attempt at a “fraudulent shakedown” at an appropriate time.
In a footnote in the suit, Dajia officials say they’ve probed the fake arbitrators who signed the phony awards and found a half-dozen have criminal records. Three others lived in the same R.V. Park in San Rafael, California, Dajia’s lawyers said. One arbitrator was the mother of a member of the group and another worked as a waiter in a Chinese restaurant, who said he signed the fictitious award “without reading it as a favor to a loyal customer,” according to the court filing.
Mirae has argued Dajia delayed telling them about the fraudulent arbitration scam and that caused problems with financing for the deal, according to the suit. That necessitated pulling out of the deal, Mirae officials added.
The Korean company’s attempt to cite the pandemic as a basis to scrap the deal also doesn’t hold water because the agreement specifically excluded pandemics as a “material adverse” event allowing cancellation, Dajia’s lawyers said.
Two years ago, the judge assigned to this case allowed a deal among drugmakers to be scuttled after evidence of wrongdoing by executives. But Delaware courts are known for enforcing contracts, and agreements with pandemic exclusions are going to be hard to beat, said
“Courts are going to be very reluctant to provide a loophole to buyers,” especially when the deals carve out pandemics, Arch said in an interview earlier this week. “I expect many of the deals to close on the terms agreed upon in the original contract.”
The case is AB Stable VIII LLC v. MAPS Hotel and Resorts One LLC, No. 2020-0310, Delaware Chancery Court (Wilmington). The arbitration-award dispute is World Award Foundation Inc. v. Anbang Insurance Group Co., No. 2020-0605.
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