Monday, 24 October 2016
Last updated 2 days ago
Feb 5 2010 | 12:17pm ET
Rapper and entrepreneur Jay-Z has sued Highland Capital Management, accusing the hedge fund of delaying a plan to retire a loan so that it could continue to collect interest payments.
The dispute stems from a $52 million loan linked to a hotel development project in New York. Jay-Z, whose real name is Shawn Carter, had hoped to build the J Hotel on Manhattan’s West 21st Street, but was stymied by the real-estate crash.
The loan came due in August, and discussions through November failed to produce an agreement on a restructuring of the loan. Jay-Z and his partners, who guaranteed the interest and other carrying costs of the loan but not its principle, proposed handing over the property in lieu of foreclosure, as well as more than $4 million to settle disputed payments and transfer costs.
According to the lawsuit, which seeks more than $3.7 million in damages, filed in Manhattan federal court, Highland and Dallas-based NexBank SSB acted in bad faith, delaying the deal to “bleed additional funds.” The loan was accruing about $20,000 per day in interest and carrying costs.
The lawsuit also seeks a judgment declaring that Jay-Z and the other guarantors have fulfilled their obligations.
Highland dismissed Jay-Z’s claims, saying that it “intends to pursue the obligations owed to Highland’s investors by the borrower, Mr. Carter and the other guarantors.”