Michael Ryan
iNews Cayman reported first on Sept. 27th, that Offshore Alert claimed The Ritz-Carlton, Grand Cayman development appeared to be insolvent by at least US$340 million, and developer Michael Ryan and related firms took out more than US$44 million from 2005 to 2012 in circumstances that were under investigation.
In a ruling dated 25th September and delivered in the Cayman Islands Grand Court by Justice Peter Cresswell, concerned one of many suits surrounding the Ritz-Carlton hotel by the developer, Michael Ryan. The ruling denied the plaintiffs, KPMG who have been appointed the receivers by the new owners, RC Cayman, from having to pay Ryan’s legal costs. Ryan was trying to force KPMG to pay a security of $1.2M to cover his costs. Ryan’s claim he was entitled to costs or indemnity as part of his terms of employment by the companies related to the Ritz for which he worked was also rejected. It was revealed in some cases he was also the 90% owner.
It was revealed there were a number of serious financial problems with the hotel and Offshore Alert’s claim as to the amount of insolvency appears to be true.
A letter from Alex Dawson of KPMG indicated what appeared to be an outflow of funds to Ryan between 2005 and 2012 of over US$10.3 million. Another firm, previously owned by Ryan, and now in the hands of new owners, Orion Developers, received over US$34 million. None of these transactions can be explained, Lawson said.
As of March 12th 2012, when Ryan’s former companies went into receivership, the unaudited balance sheet showed assets of approx. US$260M and liabilities of US$601 million. Of this $601 million approx. the secured lender, according to Deloitte, claims $250M.
Ryan also owes the Cayman Islands government $6M and along with the remainder of the debt is unsecured.
There was much emphasis placed by Judge Cresswell on Ryan’s position in the four companies of the Defendant and Plaintiff. He wrote:
“There is one circumstance which is worthy of emphasis and repetition. All of the Plaintiff and Defendant Companies are, I repeat, ultimately over 90 per cent owned by Mr. Ryan. The Plaintiff and Defendant Companies formed part of the group described above. Mr. Ryan was responsible as director for the affairs of the Receivership Companies and his conduct (in the broad sense) of the affairs of the Receivership Companies was such that immediately prior to the receivership their position was, according to Deloitte, US$(340,640,000).”
In making his ruling not to order the security for Ryan’s costs, the Judge said it was primarily because of the actions by Mr. Ryan himself that had led to the four companies into being $340 million in the red.
The complete ruling by Justice Cresswell is available on the OffShore Alert website.
