Viceroy Hotel Group has denied allegations made against the company in a lawsuit filed in Los Angeles this month.
The US hotel firm said court papers lodged in LA by Dubai-based Five Holdings contain “baseless” allegations, and it was confident a judge would support its view.
Kabir Mulchandani’s Five Holdings and affiliated parties filed a lawsuit against Viceroy claiming that its operation of a $1 billion luxury hotel on Dubai’s Palm Jumeirah has been a catalogue of errors since its opening in March.
Hotel owner Five had entered into a management contract with Viceroy, under which Viceroy would operate the hotel.
On June 19, Five terminated the contract with Viceroy and all hotel signs were changed overnight from the Viceroy Palm Jumeirah Dubai to the Five Palm Jumeirah Dubai.
Viceroy hit back, obtaining an injunction from DIFC Courts preventing the hotel’s owner from seeking to wrestle back control of the establishment – although Five claims this injunction has been suspended.
As the dispute deepened, Five Holdings launched legal proceedings in an LA court on September 7. According to the court papers, seen by Arabian Business, Five became concerned about how Viceroy was running the hotel when it started hearing complaints from guests about the quality of food and service.
It allegedly appointed audit firm PWC to look into the complaints, and, later, Alvarez & Marsal, to conduct a thorough investigation into the hotel’s operations and finances.
Those investigations uncovered “multiple counts of financial fraud and mismanagement”, the court papers allege.
This week, Viceroy vigorously denied the claims, dismissing them as unfounded. A statement from Viceroy Hotel Group said: “On September 7 2017, entities affiliated with Kabir Mulchandani, a resident of the UAE, filed a baseless lawsuit against Viceroy Hotel Group in Los Angeles.
“The lawsuit cites a consultant report dated in August to justify the wrongful ouster of Viceroy as the manager of the Viceroy Palm Jumeirah Hotel two months earlier.
“Viceroy explicitly denies the allegations in the lawsuit and the consultant report, and is confident the legal process will demonstrate the falsity of both.”
The statement adds that Viceroy and its management “honoured the terms of the hotel management contract with Mr. Mulchandani and his group at all times, including the time leading up to [Viceroy’s] expulsion from the property on 19 June”.
It said that DIFC Courts had reinstated Viceroy as manager of the Viceroy Palm Jumeirah in Dubai three days later and that Mulchandani and his group remain subject to that injunction.
The statement concluded: “Viceroy will continue to seek enforcement of the DIFC injunction and will vigorously defend itself against these false allegations. Viceroy will also aggressively pursue all remedies available to it.”
Five Holdings has been contacted for comment.
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