Two resorts in Co Cork, the Fota Island and Kingsley resorts, have secured temporary orders to freeze the assets of former directors accused of defrauding the resorts of over €1.8 million. The properties were embroiled in a legal conflict involving Yuzhu Kang, a Chinese entrepreneur, which was resolved last month.
On Friday, businesses owned by Mr. Kang, including Xiu Lan Hotels Limited, Xiu Lan Riverside Hotel Limited, and Xiu Lan Payroll and Management Services, were granted provisional asset-freezing orders against Xiu Xiang Kelly and her son, Tuo Du. Both Ms. Kelly and Mr. Du previously served as directors of the first and second plaintiff firms running the resorts.
The court has issued an order prohibiting Ms. Kelly from depleting her assets below €1.85 million and Mr. Du from reducing his assets under €1.7 million. Mr. Kang alleges in an affidavit that the defendants engaged in fraudulent and dishonest conduct.
Mr. Kang initiated these orders fearing that the defendants may dissipate the funds he alleges are due to the companies. He claims that when Ms. Kelly and Mr. Du were directors, the companies paid around €1.5 million to Ms. Kelly for various artworks and furniture – over 20 “antiques” which were displayed in the hotels during September-December 2023. He insists the items were not remotely close to their paid price and that Ms. Kelly didn’t own any of the artworks.
Additionally, he alleges that the defendants received €246,000 in 2021 as a result of “sham redundancies”. The plaintiffs have also raised concerns about a directors loan of €125,000 granted to Ms. Kelly by Xiu Lan Hotels Ltd which remains unpaid.
Consequently, businesses owned by Mr. Kang have applied for freezing orders known as “Mareva” to stop the defendants from reducing their assets whilst legal proceedings are ongoing.
Mr Kang previously made allegations of fraud and conspiracy against both Ms Kelly and Mr Dun, both residing in Fota Island. He buttressed his accusations with substantial investments he made to the tune of €30 million in resorts and various commercial properties across Dublin, Galway, and Cork. These accusations were rejected.
However, a settlement was reached outside of the courtroom which also involved Xiu Lan Holdings Ltd and Lan Sideriver Investment Holdings Ltd, operating from Ballincollig, Co Cork, and Allied Express International Development Ltd, headquartered in Hong Kong.
As the settlement terms, it was declared that Mr Kang held complete ownership over the firms that possessed the resorts and numerous commercial establishments. The defendants were also denied any claim over shares in companies related to these properties.
Ms Kelly’s rebuttal that she had acquired the Fota Island property in 2013 using personal funds and was indeed the legitimate owner was dismissed. Additionally, Mr Kang consented to pay €2.5 million to all defendants, which was a meager percentage of the disputed properties’ estimated €70 million worth.
On Friday, Mr Kang’s counsel, Stephen Walsh BL – represented by Taylor Wessing Solicitors, shared how Mr Kang only discovered about the artwork payments and redundant payments to the defendants following the initial proceeding’s settlement.
Mr Walsh insisted that their case wasn’t about enforcing the earlier settlement but retrieving the illicitly misappropriated money from the companies by Ms Kelly and aided by Mr Dun.
According to the counsel, in the preceding cases, the defendants committed significant fraud against Mr Kang and attempted to rob him of his valuable assets. He added that recent actions revealed the defendants’ dishonesty. He further stated that numerous lies were told and an attempt made to covertly extract funds from the firms before Mr Kang regained control over them. Thus, Mr Walsh argued, there was an authentic risk of the assets being squandered.
The lawyer announced that, in light of recent developments, his client has opted not to proceed with the €2.5 million payment, previously scheduled for Friday, March 15th, to the defendants as part of the agreement. Temporary freezing orders had been sanctioned by Mr Justice Rory Mulchay on behalf of the plaintiffs via an ex parte ruling. The judge expressed his confidence in the solidity of the applicant’s case regarding potential funds dissipation, therefore justifying the injunction. The court has scheduled the case for an early hearing next week.