Trendy hotel operator Morgans faces lawsuit from shareholders
Creditor Ron Burkle's restructuring plan is a ploy to take control, plaintiffs say
Morgans Hotel Group, the once wildly successful owner and manager of trendy hotels across the nation, including the Soho Mondrian at 9 Crosby Street, is now at the center of a heated conflict between the company’s largest creditor — billionaire Ron Burkle — and its largest shareholder, the Wall Street Journal reported.
Morgans is saddled with $552 million of debt. While Burkle wants to recapitalize the company as it shifts its business plan to focus on managing hotels, rather than owning them, a shareholder group led by hedge funder Michael Olshan and mall royalty the Taubman family thinks that plan could allow Burkle to gain control of Morgans.
The investor group reacted to the Burkle plan by filing a lawsuit in Delaware seeking to block the deal. A hearing in that case is set for May 13. [WSJ] —Guelda Voien