NEWS UPDATE Destination Properties Files Police Case Against Leh
According to media reports in the Financial Times three senior KPMG executives of Lehman Brothers Hong Kong based liquidators have been requested to appear before the Thai Crime Suppression Bureau in Bangkok in relation to a complaint filed by Jake Vigoda, President of Destination Properties. The complaint alleges that KPMG failed to follow Thai Bankruptcy Law in its intended auction process of assets including hotel properties in Phuket and Cha Am which were recently being floated in the market by KPMG.
Its been estimated that Lehman's Hong Kong subsidiary holds over US$1 billion in assorted investment vehicles in Thailand with a number of these located in Phuket. Destination Properties holds 5 of these assets which it's ventured on with Lehman. As per the police complaint Destination claims that on the heels of its insolvency Lehman's was unable to fund its investment and hence is in default. According to industry analysts there is the opinion put forward that the current Destination case has been filed to prevent the auction process and allow the group leeway in resolving its cash flow issues.
At the same time leading Thai daily Transsettakit has published a story that over 100 contractors in various projects have filed lawsuits against Destination Properties alleging non payment in amounts exceeding THB 700 million. The report states the fraud charges have been filed by the contractors Prakanong Police Station. It goes on to state the promises were made on repayment of the debut but since then some have been offered accommodation vouchers instead, which they say does not help them make their own bank payments or cover expenses.
Two large international hotel chains are affiliated to the Destination Properties covered by these KPMG and contractor defaults, though neither of these has ownership stakes in the company. Expectations are for the current array of court and police complaints to continue as Thailand continues to be hit by the global economic recession and while occupancy rates are recovering, room rates look at be hard hit for the foreseeable future.