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IWG property tycoon Mark Dixon faces High Court clash over pandemic payout

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IWG - Joe Amon/Getty
IWG - Joe Amon/Getty

A Manhattan property company will take aim at IWG founder Mark Dixon this week over his controversial move to put a Jersey-based subsidiary that guaranteed their rents into bankruptcy after sucking £644m in cash from the firm.

The serviced office company sparked outrage last October after winding up Regus Plc, leaving landlords whose leases were guaranteed by the subsidiary with no recourse as the parent company pushed for rent cuts in the wake of Covid.

But property firm Vornado Realty Trust is leading a legal challenge to the Royal Court of Jersey’s decision to pass the handling of the bankruptcy to Luxembourg, due to the subsidiary’s tax residency there.

The $8bn business, which counts the signage in Times Square in its portfolio, has already won one court battle against IWG this year. In May a San Francisco court ruled in Vornado’s favour over the company’s attempts to terminate a lease on an office complex worth $90m over 15 years.

IWG settled with landlords bringing a similar action late in Jersey last year but the new challenge, adjourned from June, will be heard this week.

Moving the handling of the bankruptcy to Jersey would give officials more power to investigate the controversial 2019 dividend payment than their counterparts in Luxembourg, potentially opening the door to further legal action.

The Luxembourg bankruptcy trustee was forced to defend his independence from IWG earlier this year, saying that “some creditors seem to have gained the mistaken impression that I was appointed by management”.

He added that he was investigating the controversial dividend payments as a “matter of priority”.

The name of the subsidiary was changed from Regus plc to Redox plc soon after the bankruptcy, which landlords claimed was to protect the brand. IWG declined to comment.

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