A court hearing over who should control ownership of the Crowne Plaza Orlando Universal was postponed Tuesday afternoon until Nov. 18 or 19, giving two shareholders of the company a full day to present evidence.
Orange County Circuit Court Judge Lisa T. Munyon decided to schedule a full evidentiary hearing for next week after attorneys for each of the shareholders said they may need four to six hours to present evidence and witnesses.
Brazilian court-appointed administrator Francisco F. Bomfim has managed Universal Towers Construction (UTC), the company that owns the Crowne Plaza, since 2009. He's done so on behalf of the Brazilian government, in anticipation of eventually liquidating Orlando-based assets of UTC's former majority stakeholder João Arcanjo Ribeiro, who serves time in a Brazilian federal prison for charges related to money laundering, tax evasion and homicide, GrowthSpotter first reported June 12.
Arcanjo Ribeiro held a 65 percent super-majority stake in UTC, which he later transferred to his Brazilian company, Universal Towers Investimentos e Participações Ltda (UTI). Upon founding UTC locally, Arcanjo served as its president and CEO, while Zilberto Zanchet of minority stakeholder Constrazza International Construction was secretary/treasurer.
Brazil's government has been controlling the hotel's fate by controlling the assets of Arcanjo's Brazilian business, UTI.
Judge Munyon had affirmed on Nov. 2 that UTC had wrongly diluted the value of a 35 percent stake originally held by Constrazza International down to 5 percent, as a result of actions taken by Bomfim that violate the original shareholder's agreement.
Constrazza's attorney, Eric W. Ludwig, said Tuesday he will challenge Bomfim's recent transfer of $4 million from the hotel owner-entity UTC to a Brazilian beef cattle business created in its name, Universal Towers Brasil Agropecuaria Ltda.
"In creating that Brazilian (cattle) business, UTI owns 51 percent and UTC owns 49 percent, and both should put up roughly the same amount. But UTI's amount isn't due until a few years from now, ... while UTC's equity is put up now. So UTC is on the hook, its cash equity is gone and it has a mortgage deadline coming soon," Ludwig said.
Bomfim and UTC's attorneys with CPLS, P.A., will present evidence that the Crowne Plaza's day to day operations are well-managed already by Interstate Hotels and Resorts, that all of Bomfim's actions to date as judicial administrator of UTC have been sanctioned by the Brazilian court, that those orders have been recognized in the Circuit Court of Orange County in a prior case, and that Bomfim's investment of hotel funds in the Brazilian cattle business was within his authority as fiduciary of Brazil's court.
Anthony Lazzar, general manager of the Crowne Plaza, said Tuesday that Interstate is nearly finished with multiple renovations at the hotel. Those include combining two smaller restaurants into one large dining space, and turning some of that excess space into a 2,400-square-foot ballroom addition, bringing the hotel's total event space to 9,900 square feet.
Attorney Ludwig argues a conversion of UTC debt to equity by Bomfim caused irreparable harm to Constrazza as minority shareholder, diluting its stake in the hotel ownership company from 35 percent to 5 percent.
Bomfim and UTC's attorneys argue that the validity of the debts had already been established in Orange County court in 2006, and Brazilian federal court in 2015 affirmed Bomfim's authority to manage that as he sees fit.
A Brazilian federal court found that Bomfim's non-payment of dividends was justified because the accumulated annual interest on loans was more than $3.09 million, higher than the net annual income of UTC. The court concluded that incorporating the loans into share capital of UTC was a fair way to reach equilibrium between the assets and liabilities of the company.
Any foreign decree should be recognized as valid judgment by the Orange County court, UTC's attorneys argue.