HBOS sued by Kemsley’s New York partners

HBOS and PricewaterhouseCoopers (PwC) are being sued in the US over the fallout from the collapse of Paul Kemsley’s Rock property company. HBOS – now part of Lloyds Banking Group – and a number of PwC administrators are facing allegations from two former CB Richard Ellis agents who formed a US joint venture with Kemsley and HBOS. Alan Wildes and Scott Pudalov, state in a claim filed on 29 June at the Supreme Court in New York that HBOS forced Kemsley to transfer his share of the jv back to the bank, in return for it not enforcing­ a $35m personal loan. They claim that this was an “improper inducement” and in breach of the bank’s “fiduciary obligations”. Rock Joint Ventures and Birchridge – the HBOS/Kemsley jv companies – were placed in administration in 2009. Wildes and Pudalov allege that after this, they were coerced out of possible profits owed to them in connection with two New York office buildings bought by the jv for a combined $250m (£165m). The buildings, on Madison Avenue and Fifth Avenue, are being marketed by Studley on behalf of administrator PwC and the bank. Pudalov and Wildes claim that the actions of HBOS and the PwC administrators have deprived them of their right to profit shares, equity interests, leasing commissions and asset management fees, which had been agreed. They are seeking compensation or asking the court to halt the sales. However, the sales are understood to be ongoing, with more than 100 parties having lodged an expression of interest in each property. The claim states that, in January­ 2009, the two buildings were revalued at a combined $320m, with the claimants alleging that the increase was as a result of their improvement of the assets. They claim that an independent assessment shows that the properties would be worth a total of £500m in 2014, and contend that the sale should be delayed until then. They also claim that the actions of the bank and administrators have reduced the value of the properties to $130m. Lloyds Banking Group and PwC declined to comment.