Hip-hop star Jay-Z has filed a lawsuit against Highland Capital Management, accusing the Dallas hedge fund firm of delaying a loan so that it could continue to collect interest payments. The lawsuit is seeking over $3.7 million in damages.
The rapper, real name Shawn Carter, wanted to build a boutique hotel on West 21st Street in Manhattan. The $52 million loan from Highland matured in August and subsequent discussions failed to result in a restructuring. Carter and two others had guaranteed interest and other costs of the loan, but not the principal. They proposed giving up the property in lieu of foreclosure, and also offered more than $4 million to settle disputed payments and transfer costs.
According to the lawsuit, Highland and co-defendant NexBank SSB acted in bad faith by declining to clear the three guarantors’ obligations when offered the deed in lieu of payment. The loan was accruing interest and carrying costs at a rate of around $20,000 a day. In addition to the requested payout, Carter is also looking for a declaratory judgement that he and his fellow guarantors have fulfilled their obligations.
A statement emailed to AR by Nina Devlin, spokeswoman for Highland, called the rap star’s claims “meritless” and said that Highland “will vigorously defend itself”. Rob Rothrock, a v.p. at Nexbank, did not immediately return a call.