Jay-Z sues after foiled Chelsea hotel plan

February 04, 2010 10:08AM

Shawn Carter, also known as rapper and Rocawear clothing founder Jay-Z, has filed a suit against his lenders over a loan workout for a planned boutique hotel in Chelsea. In 2007, Jay-Z controlled a company that borrowed $52 million to purchase the property for his future hotel, according to a spokesperson for investment firm Highland Capital Management, one of two lenders named in the suit. The loan matured in August and is in default, and the rapper has since handed over the keys to Highland and co-defendant Nexbank SSB in a deed in lieu of foreclosure. However, Jay-Z is claiming the lenders are still attempting to collect funds in excess of what he and two other men had pledged when they guaranteed the non-principal obligations of their company on the 2007 loan. He is seeking a declaratory judgment that those obligations have been met, plus more than $3.7 million in damages for the interest and costs incurred while being held liable for the excess funds. “Highland Capital Management believes the claims asserted by Mr. Carter are meritless and will vigorously defend itself and intends to pursue the obligations owed to Highland’s investors,” the Highland spokesperson said. [Bloomberg]