Ensconced in the penthouse and entangled in lawsuits

Exiled Chinese real estate mogul facing legal woes now claims 9K sf Sherry-Netherland penthouse he’s tried to sell for years isn’t really his

New York /
Oct.October 19, 2020 07:30 AM
Guo Wengui and the Sherry-Netherland penthouse at 781 Fifth Avenue (Photos via Wikipedia Commons; Getty Images and Douglas Elliman)

Guo Wengui and the Sherry-Netherland penthouse at 781 Fifth Avenue (Photos via Wikipedia Commons; Getty Images and Douglas Elliman) 

During an expansive chat a couple of years ago from his Sherry-Netherland penthouse, exiled Chinese real estate mogul Guo Wengui boasted about the $68 million full-floor property and his other luxury residences in London and Hong Kong.

“I have the best houses,” said Guo — who is often described as a billionaire — in that 2018 interview with the New York Times. At the time, he was also trying to unload the 9,000-square-foot Sherry-Netherland unit, which was relisted several months ago.

But now, with Guo mired in a costly lawsuit, the limited liability company registered as the owner of the Sherry-Netherland unit says he holds no stake in it. Guo, however, still lives there.

The claim by Genever Holdings LLC came last week, as part of its own bankruptcy filing in Manhattan. The LLC contends Guo’s son is behind the company, which alone owns the 18th floor unit at 781 Fifth Avenue.

“Contrary to published reports, Mr. Kwok — Guo Wengui is also known as Miles Kwok — does not have an ownership interest in the premises, although he currently resides in the apartment,” according to the filing.

But an attorney for the private equity fund suing Guo as part of a massive unpaid loan claim, called Genever’s move a “sham bankruptcy filing.” Edward Moss, representing Pacific Alliance Asia Opportunity Fund, said it was Guo’s latest attempt to hide his ownership of the Upper East Side residence. Genever’s filing is “an obvious attempt to evade judgment collection,” said Moss of the firm O’Melveny & Myers, in a written court document.

On Thursday, a Manhattan judge presiding over the Pacific Alliance lawsuit granted the plaintiff’s motion to prevent Guo or Genever from selling the Sherry-Netherland unit. Representatives from O’Melveny & Myers did not respond to an email message seeking comment.

John Siegal, an attorney representing Guo, declined to comment.

Genever contends it is filing for Chapter 11 before the penthouse becomes “further entangled in litigation involving competing claims of ownership.” It said the move would give it “needed flexibility to be in a position to maximize value under the rehabilitative power of the bankruptcy court.” Kevin Nash, an attorney for Genever, did not return an email message seeking comment.

Guo has been embroiled in legal disputes for years. He is being sued for allegedly failing to repay the $46.4 million loan made to one of his affiliated entities about a decade ago, which he allegedly personally guaranteed. Pacific Alliance filed the lawsuit in 2017 in New York. The Hong Kong-based firm contends Guo now owes it $120 million counting interest, according to court papers.

Guo’s lawyers have employed different strategies to defend him over the years. They initially argued that the lawsuit should have been filed in Hong Kong where Guo’s affiliated entity was located. A recent move challenged that Pacific Alliance did not try hard enough to mitigate the loan damage before filing the lawsuit.

Lingering luxury listing

For years, Guo has been trying to unload the Sherry-Netherland co-op. He relisted it in March, this time at $55 million, down from its original $86 million in 2015. That was shortly after he purchased the property for $67.5 million; it has gone through several price cuts.

Meanwhile, the Sherry-Netherland co-op board sued Genever earlier this month for unpaid maintenance charges that total nearly $1 million. According to court filings, the board said it was made to believe that Guo was behind Genever Holdings.

Wealthy real estate buyers in New York often use limited liability companies to shield their identity. To combat against money laundering, the U.S. Treasury Department in 2016 required title insurance companies identify individuals behind those shell companies. Guo purchased the Sherry-Netherland penthouse in 2015.

According to Genever’s bankruptcy petition, the Sherry-Netherland purchase was mostly funded by Bravo Luck Limited. That Hong Kong-based firm is owned by Qiang Guo, who is Guo Wengui’s son.

The filing also said Guo Wengui was a prominent real estate investor and businessman in China before he was forced to flee the country. It added he is seeking political asylum in the United States amid false corruption charges made by the Chinese government. Guo remains in self-imposed exile, saying Chinese authorities would have imprisoned him had he not left.





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