The Ritz-Carlton, Grand Cayman developer Michael Ryan was sued again last week, this time by the companies he used to control that are now being operated by joint receivers.
The Writ of Summons was filed on 10 April by Cesar Hotelco (Cayman) Ltd. and four related companies against Mr. Ryan personally and five other companies associated with The Ritz-Carlton property, including Orion Developers Ltd., Deckhouses Construction Company Ltd., I.R.R. Limited, Endless Service Management Ltd. and Bluetip Watersports Ltd.
The Writ of Summons did not include a Statement of Claim making any specific allegations, but instead presented a General Indorsement that claims, among other things, that Mr. Ryan was “in breach of his fiduciary and/or related and or/similar (sic) duties to the Plaintiffs, received and/or misappropriated sums or property belonging to the Plaintiffs (or of (sic) one or more of them) and has paid or transferred such sums or property to or for the benefit of the Second, Third, Fourth, Fifth and/or Sixth Defendants), in all of which the First Defendant has direct or indirect beneficial interest”.
The General Indorsement also seeks restitution of the moneys paid by Mr. Ryan to or for the benefit of the other defendants in breach of his fiduciary and/or other related or similar duties to the plaintiffs. It also seeks to make the other defendants account for any sums or property received from Mr. Ryan and pay and make restitution for sums they received knowing that they were paid or transferred by Mr. Ryan “by reason of his breaches or fiduciary or related or similar duties to the Plaintiffs”.
Mr. Ryan issued an extensive statement about the latest lawsuit saying, initially, that although the decision to appoint receivers was the prerogative of the lenders under the security documents “in this case it was unwarranted: the stated reasons for invoking the remedy were incorrect”. He further stated that the action impacts negatively on the Residence owners and guests at The Ritz-Carlton as well as the Cayman Islands generally.
“Value destruction of this type was wholly unnecessary.”
Mr. Ryan said he and his team worked hard to keep the project going during difficult economic times.
“When it became clear that the underlying loans should be restructured, I tried for many months to reach an amicable commercial solution with the lenders,” he said. “Despite those efforts, in March – without any warning whatsoever – receivers were appointed and my involvement with the hotel and project I had built was summarily terminated. This move by the lending group came as a complete surprise …”
Mr. Ryan said the latest legal action was also issued without warning.
“I have not received any demand letters or prior notice of the claims that were filed, and the most recent claims have not even been served on me,” he said. “I do not know what the alleged complaints are because the documents are so vague. I am going to try to expedite the claims so that they can be defeated as soon as possible …”
Mr. Ryan said that any “misunderstandings” about the way the business operated could have been resolved without the need for legal action.
“I believe that by taking these actions, the lender’s true goal is to try to embarrass me personally and ruin my reputation both here and abroad,” he said.
“I look forward to the proceedings being resolved in my favour once the allegations are actually made and I have the opportunity to demonstrate the true position.”
Mr. Ryan said he would not be leaving the Cayman Islands.
“Cayman is my home,” he said. “I’ve lived and breathed this development for more than 15 years and I’m proud of what we have been able to create.”
With regard to the part of the Dragon Bay project not attached to original The Ritz-Carlton, Grand Cayman properties, Mr. Ryan said it was “legally distinct from the receivership of the property-owning companies”.
“But obviously … the litigation is going to have a negative effect on its future …” he said.
Concerning the approximately $6 million owed in deferred import duty on construction materials used to build The Ritz-Carlton, Grand Cayman, Mr. Ryan said it was up to the receivers if that is paid.
“[It] is the companies in receivership, not me personally or any of the other companies, which has the debt to government,” he said, adding that he did not know if the receivers would honour debts due to creditors.
When asked last month about whether the secured lender accepted that the amount claimed by government for deferred import duty was a debt of Cesar Hotelco (Cayman) Ltd. or if it intended to pay the amount, the joint receivers said they were unable to comment.