The developer of a proposed hotel and the Corporation of Hamilton are facing legal action over an $18 million loan.

According to two writs filed in the Supreme Court on Tuesday, Mexico Infrastructure Finance LLC is suing Par-la-Ville Hotel and Residences Ltd (PLV) and the corporation.

The action is linked to an $18 million loan from Mexico Infrastructure Finance, also known as Alsis Funds, to the hotel developer last year. The corporation had signed on as a guarantor to the loan.

Correspondence between lawyers for Alsis and the Corporation of Hamilton shown to this newspaper alleges that the loan is now in default. However, lawyers for PLV denied the claim, arguing that loan proceeds were used to pay or reimburse expenses and fees.

Last month, the New York-based Carlton Group sued PLV for $1 million, claiming that the developer had breached a contract in connection to the same loan.

In legal documents filed in the United States, the Carlton Group alleged that it had arranged the loan between Alsis and PLV, but that the developer withdrew the $18 million from an escrow account without paying its $900,000 commission.

This week, a group of councillors and aldermen called for the resignation of Graeme Outerbridge as Mayor of Hamilton over his recent dealings with the developer, alleging that he had “misrepresented the corporation and put in jeopardy a substantial amount of money and assets”.

Mr Outerbridge, however, said the dispute had nothing to do with the development and that he had done nothing outside the remit of what he had been given permission to do through resolution.