Judge Stops HNA From Selling Assets While SL Green Awaits $185M Payout

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A New York judge issued a temporary restraining order freezing some of HNA Group’s assets while SL Green Realty awaits the $185.4 million award it scored in April.

An SL Green (SLG) affiliate raised concerns to Judge John G. Koeltl that Chinese financial services giant HNA would funnel its assets out of the court’s reach before SL Green gets the millions that an arbitrator ruled it was owed. 

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Former Judge L. Priscilla Hall previously ruled that SL Green was entitled to the payout, as well as another nearly $1 million to pay its attorney and arbitration fees. Hall ruled SL Green’s contract to invest in and manage HNA’s tower at 245 Park Avenue protected SL Green from potential losses due to HNA affiliates filing for bankruptcy. 

The restraining order will force HNA to notify SL Green 14 days before the sale of any assets until the Southern District of New York case’s next hearing on July 13 — when SL Green’s lawyers will ask the judge to seize HNA’s valuables until it gets paid. 

“Facing a $185 million arbitration award against it, HNA would like us to think that the letters in its name stand for ‘Have No Asset,’ but we believe that is not the case at all,” said Mark Ressler, a partner at Kasowitz Benson Torres who represented SL Green in the arbitration proceedings. “And now we are going to find their assets and take all available measures to obtain those assets if necessary, because SL Green is committed to satisfying its arbitration award.”

Several of HNA’s subsidiaries in the United States have filed for bankruptcy but one of its affiliates, HNA Group International, has not. SL Green alleges this is to keep two assets — the Palisades Premier Conference Center in Rockland County and a 51 percent stake in a portfolio of oil storage distribution and retail assets — out of the hands of its creditors. There may be more valuable properties that SL Green’s legal team hasn’t identified yet, Ressler added. 

The judgment is yet another chapter in SL Green and HNA’s court battle, which stems from an agreement between the two firms for SL Green to manage and lease the 47-story Park Avenue tower. When HNA affiliate PWM Property Management, which owns 245 Park and a building at 181 West Madison Street in downtown Chicago, filed for bankruptcy in November, it pinned part of the blame on SL Green’s failure to replace Major League Baseball (MLB) with another tenant at the property. PWM alleged that the loss of the large tenant contributed to its financial woes, and claims SL Green intentionally didn’t secure a new tenant so it could take over 245 Park. 

SL Green owns a 49 percent equity interest in one of 245 Park’s debtor companies, which holds and is the servicer of half of the $568 million in outstanding mezzanine debt on the property, CO previously reported. 

SL Green and its lawyers have repeatedly denied that it intentionally did not replace MLB at the building and argued that it was HNA’s failure to modernize the Park Avenue tower that kept new tenants away.

HNA did not immediately respond to a request for comment. 

Celia Young can be reached at cyoung@commercialobserver.com.