Viceroy files cross-claim against Dubai's Five Holdings

LA firm alleges fraud, unfair business practices against Five over Palm Jumeirah hotel
Viceroy Hotel Group has filed court papers in Los Angeles against Dubai businessman Kabir Mulchandani’s Five Holdings.
By Sarah Townsend
Wed 04 Oct 2017 10:00 AM

Viceroy Hotel Group has filed court papers in Los Angeles against Dubai businessman Kabir Mulchandani’s Five Holdings.

In the papers, Viceroy alleges fraud, extortion, conversion and unfair business practices against Five Holdings and affiliated companies.

It is the latest move in an ongoing dispute between the two companies over the management of a luxury Palm Jumeirah hotel.

In a statement on Tuesday, Viceroy said its claim arises out of the “unlawful ouster of Viceroy from its newly opened Dubai property”. The claim “seeks redress from Mulchandani and entities he controls for damage they have caused to Viceroy and the Viceroy brand”, the statement added.

Five Holdings, whose affiliate company is the legal owner of the Palm Jumeirah hotel in question, entered into a management agreement with Viceroy under which the US company would operate the hotel, with its name above the door.

However, on June 19, Five dramatically seized back control of the hotel, terminating the contract with Viceroy and changing all of the hotel signs overnight from the Viceroy Palm Jumeirah Dubai to Five Palm Jumeirah Dubai.

On September 7, Five Holdings and affiliated parties filed a lawsuit against Viceroy in Los Angeles alleging multiple counts of financial fraud and mismanagement against the hotel group. The lawsuit claims operation of the $1bn hotel by Viceroy has been a catalogue of errors since its opening in March.

Viceroy’s cross-complaint this week details Mulchandani’s decision to leverage Viceroy’s management expertise in opening the hotel, which he followed by evicting Viceroy from its role as exclusive hotel manager, Viceroy’s statement said.

The lawsuit further alleges that Five and its affiliates “created a false record of accounting-related accusations in an attempt to both justify Viceroy's eviction after the fact and extort a settlement”, the statement added.

Bill Walshe, CEO of LA-based Viceroy Hotel Group, said: “Viceroy was wrongfully ousted from its role as the exclusive manager of the Hotel on Palm Jumeirah in Dubai by Kabir Mulchandani.

“Having filed a baseless suit in Los Angeles, Mulchandani and the companies he controls will now be forced to answer for their wrongdoing in Los Angeles and the UAE.”

On June 22, Dubai International Financial Centre (DIFC) Courts issued an injunction against Mulchandani preventing him from preventing Viceroy from running the hotel.

Viceroy claims that, to date, Mulchandani and the entities he controls “have ignored the court order”.

According to the website of Los Angeles Superior Court, a hearing in this case has been scheduled for January 22 2018.

Five Holdings has been contacted for comment.

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