Mondrian Soho Tangled Up in Foreclosure Proceedings, Ron Burkle Controversy
There’s trouble in the Morgans Hotel Group empire, and it extends beyond the operator’s South Beach properties to the aggressively stylish Mondrian Soho.
On Friday, the largest Morgans shareholder, OTK Associates, sent a letter to fellow shareholders revealing that in January the downtown hotel entered foreclosure proceedings.
It was just the latest in a series of troubles plaguing Morgans. It was also reported last week that the boutique hotel manager is reeling from a deal struck in 2009, near the nadir of the recession, with Ron Burkle‘s Yucaipa Companies that injected $72 million worth of cash into Morgans’ struggling coffers but saddled the company with onerous terms that benefited Yucaipa and, among other things, infuriated Morgans’ investors, including OTK.
In February, Morgans filed a lawsuit against OTK that sought to terminate the management agreement between the two companies. OTK filed a suit of its own against fellow board members that attempted to stop a deal with Yucaipa and a recapitalization of assets. A Delaware judge decided that the Burkle deal could not proceed.
Last month, a foreclosure judgement was issued in Miami against Morgans once-white hot Shore Club hotel in South Beach.