Billionaire Ron Burkle, one of the largest creditors of Morgans Hotel Group, is off to a rough start in his legal fight with shareholders of the debt-burdened hospitality chain, the New York Post reported.
Delaware Chancery Court Judge Travis Laster has rejected a deal between Burkle and the company, which would have granted Burkle control over Morgans’ Delano South Beach hotel in Miami, among other assets, in exchange for his Yucaipa Companies waiving $113 million of debt and forfeiting millions in warrants and preferred stock.
The agreement was rushed along without adequate “discussion and deliberation,” the judge said, but it could go ahead if vetted by the board — of which Burkle is a member — and a special committee at a meeting announced properly in advance, according to the Post.
Burkle is seeking to recapitalize the company as it shifts its business plan to focus on managing hotels, rather than owning them, as previously reported. But a shareholder group led by hedge-funder Michael Olshan and mall royalty the Taubman family said the plan could allow Burkle to gain control of Morgans. [NYP] – Mark Maurer