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Donald Trump’s billion-dollar suit against his partners in the development of the Trump Place condominiums, on the oft-litigated stretch of land on Manhattan’s West Side known as Penn Yards, took a major step backward last Wednesday. Manhattan Supreme Court Justice Richard B. Lowe ruled that Trump’s partners — a team of Hong Kong investors — may reinvest the $1.76 billion proceeds from the impending sale of the property. Attorneys expect the sale to close any day. Lowe vacated the $1 billion attachment order he entered against the investors in August and denied Trump’s motions to confirm the attachment order for a preliminary injunction and for a temporary restraining order. Trump’s central allegation against his five investment partners — Henry Cheng, Vincent Lo, Charles Yeung, Edward Wong and David Chiu — is that their agreement to sell the property vastly undervalued its worth, notwithstanding the deal’s reported status as the largest real-estate transaction in New York City history. The Hong Kong partners, who effectively own 70 percent of the property and are responsible for evaluating purchase offers, accepted a bid of $1.76 billion from non-party CRP/Extell Riverside. Trump alleged he received “unsolicited offers” for up to $3 billion. Trump filed suit in the U.S. District Court for the Southern District and, subsequently, in Manhattan Supreme Court. (He recently withdrew the federal action.) In his state action, Trump asserted direct and derivative causes of action, including “breach of fiduciary duty, aiding and abetting breach of fiduciary duty, conspiracy to breach fiduciary duties, tortious interference with fiduciary relationships, breach of contract, constructive trust, an accounting, dissolution of limited partnerships, access to books and records, and injunctive relief,” according to Trump v. Cheng, 602877/05. In addition to his claim that the investors undervalued the property, Trump alleged that they violated the partnership agreement by seeking to exchange the property for other real estate. Such a “like-kind” exchange would save the Hong Kong investors an estimated $500 million in capital gains taxes. “Trump holds his interest personally, so he doesn’t have the same tax implications they did,” Trump attorney Michael J. Bowe of Kasowitz, Benson, Torres & Friedman said during oral arguments for the motions. “He wanted the money paid out. He couldn’t understand why you would sell what might be the best real estate investment in the world if all you were going to do is put your money back in another real estate investment,” Bowe added. Addressing a series of motions filed by Trump intended to prevent the Hong Kong investors from reinvesting the $1.76 billion, Lowe sided squarely with the Hong Kong team. In support of his claim that potential purchasers had offered upward of $3 billion for the property, Trump submitted a letter he had sent to Cheng stating that developer Richard LeFrak offered “to purchase the West Side Rail Yards for $3 billion” and a fax stating that Colony Capital was “willing to acquire all rental buildings and developable property for $2.9 billion.” Lowe called the statements “conclusory.” PERSUASIVE ARGUMENT The judge found the affidavit submitted by Barry Gross, an executive employed by the Hong Kong investors, far more substantive. “Gross’s affidavit is persuasive that the amount received for the property was a realistic and fair figure reached after the purchaser investigated the Properties,” Lowe wrote. “His affidavit explains that the Properties are subject to many legal restrictions, encumbrances, zoning regulations, affordable housing requirements, infrastructure requirements, park contribution requirements and other restrictions.” Lowe also ruled that “Trump fails to identify any provisions of the Agreements that prevents the type of reinvestment allegedly sought by defendants.” Trump’s action will continue, though Lowe denied all his motions to stop the reinvestment of the proceeds from the sale. Herbert Teitelbaum and Mark Sugarman of Bryan Cave represented the Hudson Waterfront, the limited partnerships that indirectly own the properties at issue. Jonathan J. Lerner, Henry P. Wasserstein and Michael H. Gruenglas of Skadden, Arps, Slate, Meagher & Flom represented the Hudson Waterfront Corporations, which are owned by the Hong Kong investors and which serve as general partners of the Hudson Waterfront. In addition to Bowe, Marc E. Kasowitz, Daniel R. Benson, Trevor J. Welch and Jennifer S. Racine of Kasowitz Benson represented Trump. Bowe said the decision will not end Trump’s quest to prevent the reinvestment. An appeal has been filed and attorneys will be asking the appellate division for injunctive relief. “The proposed reinvestment is nothing other than an attempt to extort a release for the defendant’s egregious misconduct … . We are confident that at the end of the day they will be paying Trump hundreds of millions of dollars in damages. He is not going away,” Bowe said. Lerner said his clients offered Trump an “accommodation” that would have allowed him to withdraw his interest. “Trump had available to him a couple of hundred million dollars which is now no longer available to him,” Lerner said. “He should have accepted the accommodation that was offered to him. Graciously.” The court documents reveal that Trump’s interest in the $1.76 billion sale is worth more than $500 million. Trump’s partnership agreement with the Hong Kong group extends through 2044. Following Lowe’s decision, he may not be able to cash out for 39 years.

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