Bank of China has taken control of London’s Grosvenor House from its Indian owner and appointed an administrator to begin selling the troubled property.
The move came after Sahara Group, which owns the Central London landmark, defaulted on Bank of China loans to Grosvenor House, New York’s Plaza Hotel and the Dream Hotel in downtown Manhattan, the Wall Street Journal reported Wednesday.
Under British law, a lender can seize a property in default and appoint an administrator to sell it.
Money raised from the sale will go first toward paying back all lenders and any remaining proceeds will go to the owner.
The bank would have an easier time finding a buyer for Grosvenor House than for the New York properties, the report said, citing some hotel analysts.
Saudi Prince al-Waleed bin Talal owns a minority stake in the Plaza and would be in position to influence or even block a sale of the controlling stake.
Also, the foreclosure process in the United States can be more cumbersome and time-consuming than it is in Britain.
Bank of China hired Deloitte LP to oversee the sale process. Deloitte has tapped real-estate broker JLL to help market Grosvenor House.
Marriott International Inc. will continue to operate the hotel.
“We are in the process of agreeing [on] a sale strategy with JLL as sales agent and expect there to be considerable interest in acquiring this building,” Phil Bowers, a partner at Deloitte, said in a statement.
Bank of China’s move to put Grosvenor House on the market is the latest development in a long-running saga surrounding Sahara chairman and founder Subrata Roy.
He was charged with contempt of court in India after the government alleged unpaid debts of about US$6 billion to bondholders.
He surrendered to police in February last year.
Roy and Sahara have denied the charges and have said the debt has been paid but his incarceration prompted the company to begin marketing the hotels to raise bail money.
Courts are demanding 100 billion rupees (US$1.68 billion) in bail for Roy’s release.
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