By Jeremy Hill (Bloomberg) A $37 million wire transfer will serve as a substitute for a 150-foot luxury yacht tied to exiled Chinese businessman Guo Wengui, saving him from the threat of jail time.
The boat, called Lady May, is currently undergoing maintenance off the coast of France, where it’s stuck until June at the earliest. That’s a problem for Guo: the businessman has been ordered by a New York judge to bring the vessel back to U.S. waters, where debt collectors can access it. The businessman got a $30 million loan from a fund in 2008, which according to the lender wasn’t repaid.
Guo insists he does not own or control the yacht. But a New York court said he does, holding him in contempt and levying a $134 million fine earlier this year for moving the boat. Guo says he can’t pay the fine and filed for bankruptcy in February as a result.
The conflict came to a head Wednesday as a federal judge considered exposing Guo to potential jail time by letting the New York court’s contempt order take effect, rather than keep him protected by the bankruptcy court. His creditors are seeking to collect more than $100 million for the original loan plus unpaid interest, and are particularly focused on the boat because it could be used to help repay the debt.
Instead, the registered owner of the yacht — an entity owned by Guo’s daughter — has offered to wire $37 million to a neutral third party while the yacht makes its way back to the U.S., a lawyer for Guo said in Connecticut bankruptcy court. Lady May has to be shipped back the U.S. on a freighter, a process that’ll take months and hundreds of thousands of dollars, because it can’t sail across the ocean.
“When the boat returns in something similar to same condition that it is in today, the funds will be returned — it’s that simple,” said William Baldiga, Guo’s bankruptcy attorney. The $37 million will arrive in a week or less, he said.
It’s the latest twist in a legal tangle between Guo — who amassed a fortune developing real estate in China — and the investment fund that lent to him. Guo maintains that the debt was repaid years ago despite a New York court ruling to the contrary.
Before the cash compromise reached Wednesday, a lawyer for the fund suing Guo said it is primarily interested in getting the boat back to the U.S., not seeing the businessman imprisoned.
“Jail is not anyone’s preferred option,” said Peter Friedman, representing Pacific Alliance Asia Opportunity Fund.
Guo, a vocal critic of the Chinese Communist Party, sought political asylum in the U.S. in 2017 for fear of retribution from the regime. The yacht at issue made headlines in 2020 when Steve Bannon, a former Trump political strategist and associate of Guo, was arrested aboard the vessel on unrelated federal charges.
By Jeremy Hill © 2022 Bloomberg L.P.
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