US property magnate Donald Trump has lost an expensive legal battle, forcing him to sell half of the $1.2bn (£733m) General Motors (GM) building in New York for less than $16m.
A panel of arbitrators ruled that Trump was contractually obligated to sell his half of the GM Building to bankrupt insurer Conseco for $15.6m (£9.53m).
Trump, who co-owns the building with Conseco, had argued that Conseco should be forced to sell its share to him for $295m (£180m).
Trump bought the building in partnership with Conseco for $800m (£489m) in 1998.
The dispute began in 2001, when Conseco decided to sell its holdings in the building.
In an agreement reached in July 2001, Trump offered to buy Conseco’s share for $295m in a deal that was to be completed by 15 September 2001.
But the agreement fell through, with Trump blaming the events of 9/11.
In early 2002, Conseco issued a contractual ‘buy-sell’ notice, triggering a provision that gave Trump 60 days to either buy Conseco’s stake for nearly $500m or allow the company to buy Trump’s interest for $15.6m.
Trump rejected both aspects of Conseco’s proposal and demanded that the company accept his offer of $295m.
Judge Karla Moskowitz of the Supreme Court of the state of New York this week ruled in favour of Conseco.
Trump will now be forced to sell his half-interest in the landmark building for around 15% of the $295m he was demanding from Conseco.
Conseco plans to sell the 50-story New York skyscraper and use the proceeds to improve the risk-capital ratios of the four Conseco insurance companies owning the investment.
The company previously had assets of $61.4bn (£37.5bn), making it the third-largest bankruptcy filing in US history.
Conseco hopes to emerge from bankruptcy later this summer.
Kirkland & Ellis represented Conseco.
References: EGi News 08/07/03
