Tampa-based U.S. Bankruptcy Judge K. Rodney May announced Wednesday he’s wrestling with confirming a settlement plan that gives $3 million to longtime Colony Beach & Tennis Resort owner Dr. Murray “Murf” Klauber, while Colony Lender LLC is left wondering where it stands.
May announced he will schedule a date in January to make his final ruling on both the proposed settlement and the Chapter 11 reorganization plan for Klauber-owned entities.
In the meantime, he expects Colony Beach & Tennis Resort Association attorney Jeff Warren to reassess the settlement when it comes to the money Klauber receives.
“One thing that still bothers me is if I confirm the plan, Klauber and investors get money that’s spendable and protected from collection,” May said. “That’s taking a right away from Colony Lender.”
In the proposed settlement, a U.S. bankruptcy Chapter 7 trustee receives $2.3 million. An amendment to the settlement proposed Tuesday revealed that Colony Beach & Tennis Resort unit owner and developer Andy Adams and his entities have agreed to resolve issues with the proposed settlement. That agreement also calls for giving $400,000 to be paid to creditors, $75,000 to Carolyn Field through the Field Trust and $25,000 to Adams through Breakpointe LLC.
Colony Lender, the case’s largest affected creditor, is still left wondering what it receives and when it receives it.
Colony Lender principal David Siegal told May Tuesday “it can’t be right to sell all the assets, not pay your debts and leave with $3 million,” referencing Klauber’s right to $3 million as part of the settlement.
May agreed with Colony Lender’s stance Wednesday.
“It seems to me if Klauber is getting paid as a consultant, perhaps thought should be given to not paying him until the pie comes out of the oven,” May said.
Although Warren noted that Colony Lender would either receive fair-market cash value for its assets within a year of the settlement closing in March or receive the deed to 2.3 acres of land in the middle of the shuttered resort, Colony Lender LLC attorney Michael Assaf said there was still a fairness issue that needs to be resolved.
“This is like someone saying they are going to buy your house eventually, but not tell you what they are going to pay or when they are going to pay you,” Assaf said.
May struggled with the issue.
“If approved as is, Colony Lender is deprived of control and an opportunity to collect against other sources,” May said. “I have to think that through. That’s the biggest single issue here remaining in the case.”
May gave both sides 14 days to file briefs for his review. Warren told May he “will address the Klauber issue” in his brief.
“We will have a date in January to pull all this together,” May said. “This won’t go on forever. None of us can tolerate that.”
The decision led May, though, to announce he won’t allow Colony Lender to hold a foreclosure sale of its assets in Sarasota on Friday while he reviews the materials and decides next month whether to approve the settlement and approve a reorganization plan.
“This is an important matter,” May said. “You all have informed me as well as I can be informed. I just need some time now and don’t want to take the easy way out.”
For more information, pick up a copy of the Dec. 12 Longboat Observer.
Contact Kurt Schultheis at [email protected].