Istithmar World Capital, an equity unit of the Dubai World has defaulted on a $300 million mortgage, reports by Bloomberg stated yesterday.
The mortgage was on a New York property formerly known as the Knickerbocker Hotel. Danske Bank, the holder of the loan, has now taken charge of the hotel.
The default comes after it emerged on Wednesday that Istithmar Building, had been accused in court by a lender of stealing $3.2 million from a hotel fund.
The lender, 201 Park Avenue South - a subsidiary of LEM Mezzanine - has taken Istithmar Building to the federal court in New York.
The suit is concerning a $75 million loan guarantee that 201 claims it is still owed by the company.
201 said in a statement that during initial restructuring talks the lender discovered that "Istithmar had misappropriated approximately $3,200,000.00 from an account established to fund renovations to the hotel".
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