Tax issue could delay Paulson & Co. resorts sale to Singapore

The U.S. government is alleging that MSR Resort Golf Course LLC’s plan to sell its four resorts out of bankruptcy court to the government of Singapore runs afoul of tax laws.

Preet Bharara, U.S. Attorney for the Southern District of New York, said in a court filing that the plan of MSR Resort Golf Course LLC, a group led by Paulson & Co., to sell the resorts for US$1.5 billion to Government of Singapore Investment Corp. creates US$331 million in tax liabilities that language in the purchase agreement would prevent the Internal Revenue Service from collecting.

Bharara asked the judge presiding over the case to postpone a hearing scheduled for January 15 at which the judge was to consider signing off on the deal.

The hotels include the 740-room Arizona Biltmore, located in Phoenix; the 279-room Claremont Hotel Club & Spa in Berkeley, California; the 780-room Grand Wailea, located in Wailea, Hawaii; and the 796-room La Quinta Resort & Club, located in La Quinta, California.

As part of the proposed deal, the sovereign wealth fund has the option of retaining Hilton Worldwide, McLean, Virginia, as manager of the hotels or terminating their management in bankruptcy court and paying damages in full.

The Paulson-led group sold another hotel in the portfolio, the 692-room Doral Hotel & Country Club, located in Miami, to The Trump Organization, New York City, for US$150 million in February.