The fate of a bankrupt estate that will help shape future development of the dilapidated Colony Beach & Tennis Resort is still available for the highest bidder.
In his Tampa courtroom Tuesday afternoon, U.S. Bankruptcy Judge K. Rodney May postponed the confirmation of a contract submitted by U.S. Bankruptcy Chapter 7 Trustee William Maloney with Charles Whittall, president of Orlando-based Unicorp National Development Inc., to buy the Colony Partnership’s bankrupt estate for $2.3 million.
If approved, the contract comes with a $23 million judgment ruling against Colony unit owners. The judgment includes the losses and damages owed to longtime Colony owner Dr. Murray “Murf” Klauber’s management entity, known as the Partnership, which is in Chapter 7 bankruptcy for the Colony Beach & Tennis Resort Association’s failure to pay for assessments and repairs to the resort.
Instead of blessing the contract, May decided to give the trustee more time to accept “higher and better” offers that may come forth until noon June 19. Those who already have bids in play will get notice of counter bids to make higher offers before a sale occurs June 20.
One counter bid that’s already been submitted is an offer the association submitted May 7, which includes financial backing from Longboat Key-based MW Development Group principal Manfred Welfonder; Sarasota Ritz-Carlton and Concession Golf Club & Residence developer Kevin Daves; and Siggy Levy, who has been involved in many development projects, including numerous condominium properties on Longboat Key and some developments with the Four Seasons Hotel Corp.
Maloney’s attorney, Jordi Gusso, argued May should approve Whittall’s offer until the association’s counter bidders can prove they have the capital to match or make a higher offer.
“If the association has the committed capital, let the parties bid and declare a winner because that sounds like a competing offer,” Gusso said. “Our sole interest has always been to sell the interest at the best price and move on.”
The association’s attorney, Jeffrey Warren, also urged May to consider his client’s counter bid, questioning why Maloney didn’t bring it forward for May’s consideration.
As part of the offer, Warren said the association and its development partners are willing to provide a letter of credit for approximately $4 million, which is about the amount of a secured claim Colony Lender is owed as part of the $23 million judgment. The validity of that secured claim, though, is still being challenged by the association.
Colony Lender attorney Michael Assaf noted the $4 million is less than the approximately $15 million Colony Lender is owed from overdue bank loans it purchased from Klauber.
Although May has agreed to hold off on selecting a winning bid until next month, he agreed to Assaf’s request to mandate that competing bids come with a $200,000 deposit similar to the one Whittall submitted to Maloney. Bids will start at $2.35 million because they must be higher than Whittall’s bid to be considered.
May again urged all parties to come together to settle the Colony litigation in the next three weeks.
“The gavel will seal the deal,” May said.
In the meantime, attorney Douglas Menchise, the Chapter 7 trustee for three corporations known as the Klauber entities, revealed himself as the latest bankruptcy player in the case.
Two months ago, Menchise filed for Chapter 7 liquidation on Klauber-owned entities called Colony Beach & Tennis Club Inc., Colony Beach Inc. and Resorts Management Inc.
Together, those three corporations own an 80% interest in the 2.3 acres of mostly recreational property on the resort grounds and have control of a $2.2 million damages claim. The remaining owners of that property include Colony Lender, with a 15% stake, and Colony unit owner and developer Andy Adams with a 5% interest. The Carolyn Field Estate, meanwhile, has not given up its rights to damages for its former interest in the property it has since sold to Colony Lender. Colony Lender will attempt to sell its 15% interest in the property next month at an auction in Sarasota Circuit Court if its interest is not bought prior to the sale.
Menchise urged May to hold a sale of his client’s 80% interest in the property in his courtroom. May granted that request to the dismay of Colony Lender.
May said he believes a sale in that interest will help tie up loose ends. He scheduled a hearing for June 3 to rule on what exactly Menchise has the right to sell.
“I see it as a structure to get paid and I’m going to let Mr. Menchise sell it,” May said. “This is also the estate’s last chance to pay off Colony Lender and add value to the estate. You all will either fail or succeed.”
Because Colony Lender is owed approximately $15 million, Menchise will have to entertain offers higher than that amount to pay off Colony Lender and still have money left to pay creditors.
Contact Kurt Schultheis at firstname.lastname@example.org