OTK Associates says Mondrian Soho nears foreclosure

OTK Associates, one of the largest shareholders of Morgans Hotel Group, wrote in a recent letter to investors that foreclosure proceedings began in January against the Mondrian Soho hotel, Hotel Chatter reported.

Additionally, a joint venture that owns the hotel, at 9 Crosby Street, filed a lawsuit against OTK seeking to terminate its management agreement, the website said. (Morgans owns a 20 percent interest in the joint venture.)

“We intend to vigorously defend our rights to continue managing the property under our management agreement and related agreements, but we cannot assure you that we will be successful,” OTK wrote in the letter.

As previously reported, the Morgans Hotel Group, founded by developer Ian Schrager and Studio 54’s Steve Rubell, is spending tens of millions of dollars on lawyers and bankers to undo a transaction that landed it $72 million in late 2009 from Ron Burkle’s Yucaipa Companies.

OTK, which voted for the 2009 transaction, is running a slate of seven directors to try to unseat the Morgans board at its June 14 annual meeting.

Morgans said today that if its board is re-elected at the meeting, the directors would begin to explore strategic alternatives such as a possible sale of the company, GlobeSt reported. [Hotel Chatter] and [GlobeSt] –Mark Maurer