By Jon Hurdle
PHILADELPHIA, Jan 28 (Reuters) - A Philadelphia-area real estate developer has sued the Citizens Bank unit of Royal Bank of Scotland Group Plc for $8 billion, claiming the bank had jeopardizing a $700 million project to redevelop a steel-plant site by reneging on financing commitments.
O'Neill Properties Group LP argued that Citizens Bank, using an 'artifice' of fabricated or sham defaults, tried to collect on about $180 million of loans because of RBS's own liquidity crisis resulting from soured investments.
The bank 'embarked on a campaign to raise and recover capital by any means necessary -- whether lawful or not,' O'Neill said in a lawsuit dated Jan. 19 and filed with the Philadelphia Court of Common Pleas.
O'Neill is seeking $4 billion to reflect damages it said it had suffered or expected to suffer as a result of Citizens' actions, plus $4 billion of punitive damages.
Citizens Bank spokeswoman Sylvia Bronner said the bank does not comment on pending litigation.
The U.K. government took a majority stake in RBS in 2008 in return for billions of pounds of emergency funding.
O'Neill Properties develops commercial and residential property on brownfield sites in the Philadelphia area.
Headed by founder Brian O'Neill, the privately held company said it had completed $1 billion of projects and had about $4 billion of projects in the pipeline.
According to the 35-page lawsuit, Citizens Bank's parent directed the Pennsylvania lender to 'defraud, mislead and renege' on financing commitments to recover outstanding loans, even though those loans were not yet due.
O'Neill said Citizens' actions had jeopardized its Worthington Project development, a 1.6 million-square-foot (148,600 square-meter) mixed-use complex on the site of old steel works in Malvern, Pennsylvania.
It also alleged that Citizens' actions had made it harder to obtain financing from other lenders.
'When an original lead lender for a construction project such as the Worthington Project no longer exhibits confidence in a project by prematurely seeking to exit as a lender before completion of the vertical construction, a snowball effect occurs and other financial institutions refuse to lend on that project,' the lawsuit said.
In November, Citizens secured a $61 million court judgment against O'Neill Properties over loans on the Worthington Project. The company denied it was in default.
The case is O'Neill et al v. Citizens Bank of Pennsylvania et al, Court of Common Pleas, Philadelphia County.
(Editing by Ted Kerr) Keywords: RBS CITIZENSBANK/LAWSUIT (New York Newsroom, 646-223-6000) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
PHILADELPHIA, Jan 28 (Reuters) - A Philadelphia-area real estate developer has sued the Citizens Bank unit of Royal Bank of Scotland Group Plc for $8 billion, claiming the bank had jeopardizing a $700 million project to redevelop a steel-plant site by reneging on financing commitments.
O'Neill Properties Group LP argued that Citizens Bank, using an 'artifice' of fabricated or sham defaults, tried to collect on about $180 million of loans because of RBS's own liquidity crisis resulting from soured investments.
The bank 'embarked on a campaign to raise and recover capital by any means necessary -- whether lawful or not,' O'Neill said in a lawsuit dated Jan. 19 and filed with the Philadelphia Court of Common Pleas.
O'Neill is seeking $4 billion to reflect damages it said it had suffered or expected to suffer as a result of Citizens' actions, plus $4 billion of punitive damages.
Citizens Bank spokeswoman Sylvia Bronner said the bank does not comment on pending litigation.
The U.K. government took a majority stake in RBS in 2008 in return for billions of pounds of emergency funding.
O'Neill Properties develops commercial and residential property on brownfield sites in the Philadelphia area.
Headed by founder Brian O'Neill, the privately held company said it had completed $1 billion of projects and had about $4 billion of projects in the pipeline.
According to the 35-page lawsuit, Citizens Bank's parent directed the Pennsylvania lender to 'defraud, mislead and renege' on financing commitments to recover outstanding loans, even though those loans were not yet due.
O'Neill said Citizens' actions had jeopardized its Worthington Project development, a 1.6 million-square-foot (148,600 square-meter) mixed-use complex on the site of old steel works in Malvern, Pennsylvania.
It also alleged that Citizens' actions had made it harder to obtain financing from other lenders.
'When an original lead lender for a construction project such as the Worthington Project no longer exhibits confidence in a project by prematurely seeking to exit as a lender before completion of the vertical construction, a snowball effect occurs and other financial institutions refuse to lend on that project,' the lawsuit said.
In November, Citizens secured a $61 million court judgment against O'Neill Properties over loans on the Worthington Project. The company denied it was in default.
The case is O'Neill et al v. Citizens Bank of Pennsylvania et al, Court of Common Pleas, Philadelphia County.
(Editing by Ted Kerr) Keywords: RBS CITIZENSBANK/LAWSUIT (New York Newsroom, 646-223-6000) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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