By Grace Leong
MARINA Bay Sands has been dragged into a legal battle between the operators of American celebrity nightclubs Pangaea and Avalon and a former partner over rights to manage clubs at the Sands' iconic glass and steel Crystal Pavilion.
Kraze Entertainment first sued Pan Av Asia Partners, which owns the trademarks for the two nightclubs, in May, alleging that it violated a management agreement to operate the two clubs.
But Kraze later withdrew that suit, and this week filed two new lawsuits in High Court against MBS, Pan Av and its shareholders, Michael Ault and Steve Adelman, The Business Times has learnt. Mr Ault and Mr Adelman are American entrepreneurs in the nightlife industry, and have relocated to Singapore to run the two clubs.
At issue is whether a licence agreement granting Kraze exclusive rights to use the Pangaea and Avalon trademarks has been lawfully terminated.Kraze, which has ties with South Korean entertainment company Krazetech, alleged that the defendants would be violating the licence agreement if they were to launch the two clubs on July 26 - the current opening date - under a new partnership with Crystal Pavilion Marina, a Singapore-based operator of cabarets, nightclubs, discos and karaoke lounges.
In disputing the new partnership, Kraze invoked a non-compete clause in the management contract, which bars Pan Av from competing with Kraze's clubs until April 9, 2012.
MBS representatives declined to comment on the dispute. But sources within MBS say that it is likely that the July opening date could change yet again, because it will take time for Crystal Pavilion Marina to complete the clubs' renovation.
In spite of the legal dispute, MBS hopes to open the two clubs before the start of the high-profile Formula One Singapore Grand Prix in September.
The opening of Pangaea and Avalon was originally slated for December 2010, but has repeatedly been delayed because of the growing rift between Kraze and Pan Av, among other things.
According to the suit, Pan Av delayed assigning the trademark rights to Kraze allegedly because it failed to pay US$1 for the assignment. Instead, Pan Av said that it would terminate the licence agreement if Kraze refused to sign a supplementary agreement that was 'substantially unfavourable' to Kraze's interests.
Pan Av also allegedly incurred unapproved expenses for a DJ party called 'Avalon at Large', and allegedly paid S$25,000 from July through November 2010 to Mr Adelman for his accommodation expenses even though he hadn't yet secured accommodation in Singapore, the suit said.
A total of S$59,613 in staff salaries was also disbursed, but the identities of the employees weren't provided, the suit said.
Because of Pan Av's alleged violations of the management contract and the licence agreement, which was allegedly terminated on April 13 - that resulted in MBS terminating Kraze's lease on April 21, and taking possession of the clubs on May 6.
Pan Av's lawyer, Christopher Daniel of Advocatus Law LLP, declined to comment.
According to Kraze, MBS was 'unconcerned' about the difficulties Kraze had with Pan Av, and allegedly rejected its proposal to get another international nightclub brand for the Crystal Pavilion.
MBS also delayed handing over the clubs' premises for seven months, and was 'unreasonable' because it terminated Kraze's lease at short notice, the suit said.
Kraze, which said that it has spent more than $9 million on establishing the nightclubs, is seeking court orders to recover damages for the allegedly breached lease as well as for the allegedly misapplied funds.
In addition, Kraze is also seeking an order for the alleged termination of the license agreement to be deemed unlawful and invalid. Kraze also wants an order declaring that it is not in breach of the lease at the Crystal Pavilion and for the lease to be reinstated.
'There is no other suitable location in Singapore akin to the premises for development of an international brand nightclub,' Kraze said.
This article was first published in The Business Times.
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