Ryan tied debt to Dragon Bay

| 14/03/2012

real_estate-dragon_bay_estates-rotator_3 (258x300).jpg(CNS): Correspondence between government and the developer of the Ritz-Carlton, Grand Cayman shows that Michael Ryan, the owner of various companies related to the Ritz development and the proposed Dragon Bay development, wanted to tie his repayment of duty on the hotel to future plans for that project. The results of an FOI requests made by CNS reveal that, despite government’s efforts to collect the money owed to the public purse, the developer was trying to leverage the debt to gain further concessions on Dragon Bay, as well as other issues regarding what he called the “viability” of the continued project.

According to the release of numerous pieces of correspondence this week, the financial secretary’s office and customs have pressed the developer on numerous occasions to pay back the more than $6 million, but to no avail. The documents show that Ryan was seeking to make his repayments conditional on government assisting him with the Dragon Bay development.

In a letter written to the financial secretary in January last year Ryan says he was “concerned” that government was “making a demand for payment of duty without addressing any of the substantial challenges that this project is faced with”, referring to Dragon Bay.

Although the Dragon Bay project was not directly related to the original duty concessions given on the development of the Ritz, Ryan claimed it was linked to the main agreement that had been made between government and his companies regarding further development of the site.

By demanding the duty from the hotel development and not helping with the ongoing project for Dragon Bay, Ryan implied that government was threatening “its viability” and future survival. He wrote that it was of mutual interest for government to discuss the issue to secure Dragon Bay’s future potential as he continued to deflect the demands made of him to establish a new payment plan to pay back the public purse.

A week later, however, on 21 January 2011 Tony Haddad, the asset manager for Ceasar Hotelco Cayman Ltd, one of the companies owned by Ryan, wrote to the financial secretary with a proposal. Although he said that the firm still viewed “the duty deferral request as inextricably linked with Main Agreement” in relation to Dragon Bay, “in the spirit of cooperation” and in advance of a meeting with the government, a plan had been formulated to pay the deferred duty, he said.

On behalf of Ryan, Haddad proposed a monthly payment plan starting that month to pay back the $2,969,178 at a 1% amortization rate per month, which was the sum owed at the end of 2010. He said the remaining balance would then be made in one balloon payment at the end of the amortization period.

“We have researched the matter and the formula that I am proposing for this type of arrangement is very prevalent today in the industry and reflects the recognition of the distressed nature of the luxury real estate market and the benefit of restructuring obligations to enable projects to work through this challenging time," he wrote to Kenneth Jefferson, the financial secretary.

A schedule of correspondence from the ministry shows ongoing correspondence between the developer and the financial secretary’s office over the course of 2012 but no payments were ever made.

On 28 February, the day that it was revealed RC Cayman Holdings LLC was seeking to take control of the Ritz, the financial secretary again wrote to Ryan asking for payment of the outstanding duty. Ryan responded again, skirting the issue and attempting to tie his debt to the wider project as well as the problems he was facing re his lender.

On Monday of this week Jefferson sent one more demand asking Ryan to respond specifically to the Ministry of Finance’s previously stated position that CI$6,186,806 (US$7,544,886) is to be repaid by 31 December 2012, but officials have confirmed that so far no money has been received.

In the wake of news this week that Ryan has now lost control of the Ritz, government issued a statement saying it was confident in the resort's ability to continue providing excellent service. Following the appointment of two KPMG receivers on Monday by the creditors, RC Cayman Holdings LLC, the company that currently owns the debt on the hotel, the tourism ministry pointed to the significance of the hotel to the tourism product.

“The Cayman Islands Government also notes that The Ritz-Carlton welcomed a significant percentage of 2011 visitor arrivals, which represented the best stay-over visitor arrival figures in 10 years,” the statement said.

See sample of correspondence released by the ministry below.

See related article here

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Category: FOI

Comments (54)

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  1. Anonymous says:

    anyone know why the Compass stories on this issue virtually sound like Mike Ryan written press releases? 

  2. Kadafe says:

    Or in other words let me finish all of my developments then screw you!

  3. Rick O'Shea says:

    So any chance in finding out the owner/investor of RC Cayman Holdings LLC?  Sorry if I missed it somewhere but I would think this is private informaiton.  Not to speculate wouldn't it be funny if it were Dart?

  4. Anonymous says:

    Does this mean Ryan will no longer be directing Cayman Immigration and business policies?

  5. Anonymous says:

    To save the precious time of readers who do not want to read through Ryan's responses (or who don't think they can stomach it), they can be summarised as follows:

    Dear Hon Financial Secretary: bullshit, blarney, excuse, excuse, excuse, try to weasel out of obligations, toot own horn, try to pull wool over eyes, excuse, excuse, excuse, in today's economy, 9/11, hurricane Ivan, blah blah blah, try to find obscure loopholes in agreement, more blarney, more bullshit, I'm sure you bozos will fall for this as you are merely lowly natives without my god-given superior intellect as a rich white male, with my absolutely heartfelt best regards, M. Ryan.

    I hope that clarifies matters.

  6. Anonymously IRON CLAD says:

    Who said Cayman didn't have a CIRCUS, or should I say, the Cayman Islands is officially one big CIRCUS?


  7. Anonymous says:

    Dart and company are salivating over the deal they may get on this.

    • Anonymous says:

      And it will be with concessions on not having to pay for tourism tax if the against cayman alliance  is approved. He can buy up all the hotels exempt from paying that tax.  we need to stop it!!!

  8. Slowpoke says:

    So much “schadenfreude” in response to this article, on the radio, etc.

    Is it warranted?  I have no idea.  Does his self-importance and self-promotion outweigh some of his generosity (Crisis Centre, juniorsports…)?

    I think the real issue is that when things were good in Cayman and employment was easy to come by, there was a lot less resentment and anger towards the “top 1%”.

    We have to find a way to get a middle class back, with some security (other than just Civil Service employment).  We also have to ensure those less fortunate are taken care of, even if libertarians resent it (would you rather give $20,000 to DCFS or $60,000 to Northward?).

    The reality is that at this point, we may have to bite the Dart bullet to get us back on equal footing, and then ensure that we elect politicians with more foresight and leadership than either the PPM or UDP have demonstrated.

    • Anonymous says:

      How about you bite the DART bullet alone.  The rest of us will continue to fight the monopolostic efforts of that entity to dominate this island, its prime real estate and its industries,  and at the same time get rid of the dinosaur politicians and bring in new intelligent leaders.   Or do you feed into the same BS that Dart is lord and saviour and he only means well for anyone other than his pocket book?  Give me a break. 

      • Slowpoke says:

        I really don't understand where you got the idea that I was a big Dart supporter.  My point was that there do not seem to be any other viable options out there at this time, to rapidly stimulate/rescue this economy.  If you know of some or have some, give me a break and tell me about them.

  9. Sometimes says:

    XXXX I find it a little like poetic justice that the Ritz-Carlton and its surrounding properties and proposed new builds are all higher end, restricted access, 'us and them' homes for the wealthy – whereas Camana Bay, asides from the condominiums, have made a wonderful shared space where all members of the public can spend time for free.  True, Michael Ryan has held many charity events, but almost always involving famous faces that he hob-nobs with. 

    The Ritz-Carlton does fantastically for Cayman, but largely down to its great staff [many of which are paid very low wages].  Well done to Michael Ryan for having the foresight to build the hotel at the start, but it was completed years ago and is not reason enough for an already empoverished Government to forgive or redirect a huge debt.  They need this cash to pay for schools!  

    I believe that the Government are not permitted to size Michael Ryan's personal property legally, as it is the company 'CondoCo' that owes.   He's got other companies too such as Orion Developments and Stingray Construction – spreading the business interests around to save one from the other.  

    • Anonymous says:

      You might be allowed free access at Camana Bay, but you can't afford anything in most of the stores or restaurants there.   Nuff said, that should tell you something right there.  Dart does not hobnob with locals either, no one has ever seen him nor knows what he looks like, except for his inner circle. That, also, should tell you something right there.

  10. Anonymous says:

    Is it not customary in situations like this for the original deferral deal to provide no collateral whatsoever and for the company that owes the money to government to be a shell with no assets whatsoever so that the developer and those who get a condo or two along the way are not affected when the house of cards comes down? Just asking.

  11. Knot S Smart says:

    Is it true that he had a very expensive car that was shipped off the island last week and his jet is gone too?

  12. The Truth is Out There says:

    I wonder if the person that negotiated the concession is worried that other issues may be exposed as a result of this legal battle?

    • Chris Johnson says:

      What legal battle. The receivers are in, they will sell the hotel and resign and everyone lives happily ever after whilst the owners get back their four companies. This has been a fairy story from day one and Government is playing the part of Cinderella and bigmac as little red riding hood. What is really required is a big bad wolf to sort this situation out. All is not lost as Government may be a preferred creditor. They need get the AG on this right now.
      What is odd is amusing is the date of the last Government letter. I would say it is a bit late and they had been warned many times by none other than readers of CNS. Rather ironic.

      • Anonymous says:

        Government a preferred creditor – I doubt that very much particularly when there were certain condos involved. Curious how there was also a gap in the re-payment requests which allowed time for certain condos to be sold. 

      • Anonymous says:

        A fairy tale that resulted in the most important tourism property in the Cayman Islands. Without the Ritz-Carlton, the Cayman Islands tourism product would be in complete shambles, rather than just the dismal mess it's in.

    • Anonymous says:

      I hope that it will expose the condo grabber and his axx will be bare.

  13. Anonymous says:

    The Government needs to put all these companies that owe or will owe duty into liquidation and let a liquidator look into what has happened.  A receiver only looks out for the secured lender.

    • Chris Johnson says:

      I think the Safehaven project is owned by a different company if that one owes the duty. If so readers can relax as the sale price was $80m and the mortgage about $120m or more I forget. Blood out of stone perhaps. One day the story will unfold but bet Barefoot does a song first. Go for it George but remember where the idea came from.

  14. Old Sea Captain says:

    It looks like someone, wonder who, promised to reduce the debt by approximately 50% in return for I wonder what or Ryan assumes that the record keeping of the UDP administration is so bad that no one in Government knows exactly how much he owes. No other government in the world would accept all of the foot dragging and delaying tactics, excuses given by these people without a conscience. Ryan and his cohorts are living the high life and forcing the government to add 2% to duty and 25cents per gallon to gasoline to extract money from the poor Caymanian people to run the government. If they paid this debt this extra burden could be lifted off the backs of the poor people. I suggest we all converge on the Ritz every sunday during their sunday brunch and eat and drink until we run up a $6million bill, as these people are in bed with our elected leaders and there isn't a chance in hell of collecting this. Any politician that can assure me that he will put laws in place that our elected leaders will be held accountable for all the bad decisions they make and have to pay back the money that is wasted, given away and spent willy nilly has my vote.


    CNS: To clarify, the $6 million is not owed by the operators of the Ritz Carlton hotel, so running up a $6M brunch bill would be targting the wrong entity. The bill to government is owed by the developers of the property.

  15. Anonymous says:

    "Lil bugger!" …smart tho…just not smart enough to not get caught!

  16. Anonymous says:

    And you think Ryan is the only developer that has received concessions? Dart is just a stone throw away! 

    • Stiff-Necked Fool says:

      Oh what a tangled web we weave!

      BOOM CRASH – thats the sound of the BIG fall of Michael Ryan!

    • Anonymous says:

      Dart spent $780,000,000 here with NOT one concession…He should get some. The rest of the developers have gotten concessions without spending even a dime here.


      • Anonymous says:

        Hhow about my saml business should get some duty concessions.  I need them more than dart does.

      • Anonymous says:

        That is like saying if some nice fellow takes your daughter out to dinner ,spends money on her that he shoud ( to use your words) "He should get some."

        • Wrong! says:

          That flawed alanogy is disgraceful. Dart’s massive contribution to Cayman should receive acknowledgement and frankly your thanks, not this tripe.

          Your analogy if modified probably better applies to you though: you don’t want to pay for your whining and dining but you want “some” for free. Try contributing back to those who contribute to your financial well-being before you whine about free-loaders.

      • Anonymous says:

        Dart did get concessions.

  17. SKEPTICAL says:

    There is a defense system used by military aircraft which are under attack by missiles. It blows out metallic ” chaff ” in the hope that this will divert the incoming missile away from it’s intended target.Fast forward to CI Government’s demands for payment of $6 million owed by Ryan entities, and the corresponding defensive ” chaff ” blown out by those same entities in the form of correspondence which says nothing, and answers demands and questions, with more questions. Perhaps in the hope that, before the creditors actually break down your front door, you can slip out through the kitchen. There was a wonderful line in the film ” The Great Race ” many years ago. The Villain, finding himself on the losing end of a sword fight with the Hero, leapt from a castle window with the immortal words ” He who fights and runs away, lives to fight another day – I have a boat waiting. “

  18. Anonymous says:

    A guy builds a hotel, which must have had a positive economic and social impact? Runs numerous tennis events which raise money for the Crisis Centre I believe, sponsors a number of sporting and business events, yet memories are short and despite the 'successes' of these ventures, among others, for Cayman- there are still people who simply love to make noise! 

    I wonder how much revenue the government has failed to gain while the Hyatt and the Courtyard Marriott have sat like eyesores for year? But you don't see people ranting about that? Or the media looking into it? 

    • Anonymous says:

      All his "community goodness" is meant to help him cover just this type of thing.  I am gald for the charities that he ehpled but keep in mind.  He is setting himself up as a saint while living the high live and not paying the Cayman islands Government the monies he owes.  Doing some good does not excuse stealing from the Cayman People by not paying your debts.

    • Anonymous says:

      Your points have nothing to do with the issue at hand!

    • Anonymous says:

      fair comment….. lets see how much the ritz contributes to the economy every year compared to the $6m….

    • Anonymous says:

      two ..err.. three wrongs don't make a right…

    • Anonymous says:

      So, it's ok to cheat people out of millions as long as you do the 'right thing' for charities and throw your name next to big ticket events? You've missed the point…Ryan needs to pay his bills like all of us. Regardless of the money his development brought it, he walked away from a $6M debt. I don't know about anyone else but as a Caymanian I not only feel cheated by Mike Ryan, I feel cheated by our own Government for allowing it in the first place!

  19. Anonymous says:

    The same thing happened to me once, I was getting $350K every quarter and it took 11 quarters before I realized that I hadn't received a payment. This is all quite understandable.

  20. Anonymous says:

    What a nerve this developer has.   Demanding more concessions and tying it to the Dragon Bay Development.  But then again, the ultimate party to blame is Government, for allowing this nonsense in the first place. 

  21. Anonymous says:

    Michael Ryan XXXX has given the Cayman Government the run around for yours. Well you know what?? That big mansion he lives in called Star Fish Point at the end of Patricks Island… Let Government seize that place as payment of the $6 Million then lets turn that into the Hotel Training School. That shoukd teach him!!

  22. Anonymous says:

    The Financial Secretary needs to submit a claim to the receivers asap.

  23. Anonymous says:

    Any Politician that tries to give Ryan more concessions so they can collect on a debt already reneged on should be run off the island in a row boat with no food or water.
    This "taking care" of developers and ignoring the people has to stop.

  24. Anonymous says:

    Wow! XXXX Government should sieze all of his personal assets in an effort to recover the monies owed.

  25. Dreadlock Holmes says:

    Good work on behalf of the people CNS. Unfortunately this same type of scenario is happening all over the world. Corporations and developers are making demandsof government to "assist" them in these tough economic times by waiving rules and regulations and demanding concessions. These were originally put in place to protect against just such scenarios, but they were ostensibly formulated not to protect them but the public. It seems they can move the goal posts whenever convenient and tragically, this happened with the assistance of governments too timid to stand up against corporate abuses. And at the same time too closely associated. Time again to ask who governments are representing.

  26. Anonymous says:

    "On behalf of Ryan Haddad proposed a monthly payment plan starting that month to pay back the $2,969,178 at a 1% amortization rate per month which was the sum that owed at the end of 2010".

    "On Monday of this week Jefferson sent one more demand asking Ryan to respond specifically to the Ministry of Finance’s previously-stated position that CI$6,186,806 (US$7,544,886) is to be repaid by 31st December 2012".

    I am confused. Is the debt $3m or $6m?

    • Rick O'Shea says:

      The debt is $6M.  Ryan's propoals was to make the self determination the debt was distrissed and decided to reduce the amount owing to $3m which was presumably the value of the debt at the time.  It doesn't look like government budged in demanding the full payment.  Good on them.

      • Anonymous says:

        Except it meant they got nothing in the end, rather than $2.9m and the propsect of the balance over time.  So, not so good on them when it comes to the bottom line.

        And remember the proposal was not a haircut in the style of a distressed debt like Greek bonds etc, rather it was rescheduling.

        So rather than have 50c on the dollar now and a business which could earn out the balance, CIG ends up having to write off the entire $6m

        • Rick O'Shea says:

          True the debt wasn't purchased on the open market so not a true distressed debt technically it was more loan forgiveness but it is not the point.

          The line had to be drawn "in the sand" somewhere.  You can't make everybody happy.  Government would be damned if they accepted it and they are damned that they haven't accepted it.