Friday 6 June 2008

LA Struggles for Harcourt Developments

The Irish Times reported at the beginning of May that a company backed by businessman Pat Doherty and former broadcaster Mike Murphy is facing a legal battle in the US over a €500 million Las Vegas property development.

Las Vegas developer Glen, Smith Glen (GSG) and two linked companies are suing Harcourt Developments, its Nevada subsidiary, Mr Doherty himself and a number of others for breach of contract in a Nevada court. GSG is Harcourt's local partner on its Sullivan Square project, a €550 million mixed apartment and commercial development that the pair are building in Las Vegas.

GSG and its co-plaintiff, Sullivan Square Harcourt and GSG DSM Holdings, began proceedings in the court on May 1st. According to documents filed with Clark County district court, GSG and Sullivan Square say that Harcourt Developments and Harcourt Nevada have defaulted several times on their obligations to fund the project. This has resulted in contractors and consultants working on the development not being paid. They have taken two other lawsuits against the company. Also a number of them are claiming a share in Sullivan Square as compensation. GSG, run by businessmen Alan Glen and Kenneth Smith, owned Sullivan Square and began working on the project itself. An acquaintance introduced them to Mr Doherty and Harcourt.

In August 2006, the Irish company agreed to fund the development in return for a 60 per cent share. GSG's complaint states that last October, Harcourt Nevada defaulted on its obligation by "failing to timely provide sufficient funding for development and construction of the project, and failing to fund the overhead for GSG dedicated to the project". The court papers say that in February, Mr Doherty personally assured GSG that Harcourt would meet its obligations in 24 hours, but failed to do this. Also during February, Harcourt approached GSG and asked it to change the agreement to give a third party a 20 per cent stake in Sullivan Square to secure funding. GSG was to hand over 9 per cent. The plaintiff says that Harcourt subsequently admitted that there was no new third party and that it wanted 9 per cent as a condition for providing funding. GSG states that it reluctantly agreed to give Harcourt 9 per cent, cutting its share of the project to 31 per cent.

The documents state that Harcourt cannot plead inability to pay as the plaintiffs are aware that the defendants "maintained lavish and extravagant lifestyles" during the period. Harcourt Developments principals include Mr Doherty, Mr Murphy, and English businessman, Andrew Parker Bowles, former husband of Camilla Parker Bowles.

The project was launched in Ireland with much media publicity just a year ago. There are a number of other reports on the case here & here.

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