Even as Royal Palm becomes James hotel, questions still linger on what led to hotel’s troubled past

As name changes, court papers reveal Carbon Capital ‘instigated negative publicity’ which contributed to the financial collapse and led to a series of false 'Miami Herald' articles about Guy Mitchell to gain financial leverage.
(PR NewsChannel) / June 23, 2011 / MIAMI 

The name on the hotel may soon change, but that won’t put an end to the royal sized battles that led to Royal Palm’s eventual sale.  The major player involved was South Florida businessman Guy Mitchell who took a hotel-sized beating to his reputation.

Federal court papers allege that Carbon Capital “instigated negative publicity” to intentionally cause financial ruin.

A lawsuit filed by Mitchell claims that after marketing for the sale of the hotel began, “negative stories began appearing in Miami news media regarding Royal Palm and its dispute with Carbon Capital… these stories appeared as a result of Carbon Capital’s efforts to publicize its actions against Royal Palm and Mitchell, despite the fact that it knew that such publicity would impair the market value of the Royal Palm Hotel.”

Though the lawsuit was filed in 2008, the contents have not been made public until now.

The suit claims that after Carbon Capital filed a lawsuit in New York State Supreme court, the ‘Miami Herald’ published an article under the headline ‘The Battle for the Royal Palm Becomes Increasingly Bitter; Investment Giant Blackrock Affiliate Carbon Capital Suing to Take Over the 417 Room South Beach Hotel from majority owner Guy Mitchell.’

The ‘Herald’  article sources transcripts which quote Nicholas Crowell, Carbon Capital’s litigation counsel, as saying:  “Mitchell is stealing from the till, for all intents and purposes.”  

Mitchell’s lawsuit essentially accuses Carbon Capital of lying to the ‘Miami Herald.’  Carbon Capital chose not to disclose the fact that Mitchell had transferred money he lent from the Royal Palm Hotel to repay $4 million in interest-free loans he had made the year before  to keep the Royal Palm Hotel in business, the lawsuit alleges.

Carbon Capital also never mentioned that the loans and repayments were recorded in the Royal Palm Hotel’s books, copies of which had been provided to Carbon Capital on a monthly basis.

Carbon Capital used the ‘Miami Herald’ to report these claims even though the information was not true, the lawsuit says.

The lawsuit also claims that the negative publicity was intentionally instigated by Carbon Capital and was detrimental to its sale.  It also alleges that Carbon Capital intentionally made false statements as a tactic to ruin Mitchell’s reputation so that it will result in him surrendering his interest in the hotel.

Guy Mitchell invested tens of millions in the Royal Palm Hotel in good faith not realizing that Carbon Capital was using him to keep the senior lender Wachovia Bank current, according to the lawsuit.

Carbon Capital dealt  in bad faith with the intent to drain Mitchell’s approximate $24 million dollar investment, the lawsuit claims.  The motive:  they wanted to keep the profits in the hotel for themselves because they were  more than triple Mitchell’s initial investment.

Royal Palm was always current in its mortgage payments with Wachovia Bank, the senior lender.  But according to the lawsuit, Carbon Capital failed to make its agreed scheduled payments to Wachovia Bank which the lawsuit claims is a “material breach” of its obligations under the settlement agreement.

Mitchell said in the lawsuit that Carbon Capital materially breached its duty of good faith and fair dealing by intentionally instigating bad publicity for the Royal Palm Hotel at a time when Carbon Capital knew the hotel was being marketed for sale.

These  reckless actions, the lawsuit claims, were intentionally taken which destroyed a pending $200 million dollar deal with Hyatt Hotels. And they were taken, the suit further alleges, after Senior Managing Director Larry Wolf of Eastdil wrote Carbon Capital about the need to avoid negative publicity regarding the Royal Palm Hotel. The lawsuit claims that despite the warnings and knowing that the publicity would adversely affect the market price of the hotel, Carbon again instigated negative and false publicity, the lawsuit claims.  The hotel ended up losing 50-percent—$100 million—in value.

Direct Link:  https://prnewschannel.com/2011/06/23/even-as-royal-palm-becomes-james-hotel-questions-still-linger-on-what-led-to-hotel%e2%80%99s-troubled-past/

SOURCE:  Truth in Finance

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