U.S. Bankruptcy Judge K. Rodney May will make another ruling concerning the Colony Beach & Tennis Resort.
This time, May will decide whether to allow U.S. bankruptcy trustee William Maloney and Colony Lender to sell furniture that unit owners believe they own.
On Thursday, Sept. 10, Maloney’s attorney, Jordi Guso, filed a motion in Tampa asking May to reconsider Maloney’s previous request to walk away from the furniture.
Maloney, who made it known to the court Aug. 24 he wanted nothing to do with the furniture, has changed his mind.
The motion reveals that Maloney has struck a deal with Colony Lender representatives David Siegal and Randy Langley to sell the furniture. Siegal and Langley own the resort’s estimated $10 million bank loans and are the largest secured creditor in the resort’s Chapter 7 liquidation.
“At the time the trustee filed the motion, the trustee believed no equity existed in the personal property,” the motion states. “After the (Aug. 24) hearing, the trustee and Colony Lender reached an agreement, subject to approval of the court.”
That agreement calls for the trustee to receive, for the benefit of the debtor’s estate, either $100,000 or at least 30% of the proceeds of the liquidation sale of the units’ furnishings after all expenses have been paid — whichever is greater.
“The court’s reconsideration will generate a significant benefit for the estate as it will allow for substantial recovery from the liquidation of the personal property, where originally no such recovery was considered possible,” the motion states.
The motion outlines a number of different options, which are all contingent on how much money the furniture sells for.
For instance, if the proceeds of the sale amount to $400,000, the estate would receive $120,000 and Colony Lender would receive $280,000.
But if the sale of the furnishings only fetches $150,000 after all estate expenses have been paid, the estate would receive $100,000 and Colony Lender would retain $50,000.
And if the sale fetches $75,000 after all expenses are paid, the estate would receive $75,000 and Colony Lender would receive nothing.
In a motion filed with the court Monday, Sept. 13, Colony Lender explains that it agrees with the trustee’s motion and maintains it has a right to the furniture.
The motions come weeks after attorneys for both Colony Lender and the Colony Beach & Tennis Resort Association argued in May’s courtroom over which group owns the furniture.
At an Aug. 31 hearing in Tampa, association attorney Adam Alpert told May his client believes the unit owners own the property inside the units.
The comments surprised Colony Lender attorney Michael Assaf, who pointed out that a previous document shows the association had no interest in the furniture.
But in an e-mail sent to unit owners Tuesday, Sept. 14, Colony Association President Jay Yablon polled unit owners to see how many of them have an interest in occupying their units this season.
In the e-mail, Yablon informs unit owners of Colony Lender’s interest in selling the furniture.
“So, in deciding how to respond to this, we need to know whether you care, or not, if your unit is emptied out by Mr. Langley and Mr. Siegal,” Yablon wrote.
An auction of the interior furnishings would most likely delay plans for owners to get back into their units this season or force them to buy furniture for the units until a renovation plan for the property is agreed upon.
Siegal, however, says Colony Lender is just collecting on its loan.
“We are doing whatever a bank would normally do,” Siegal said. “At the same time, while we very much want to work with the association and hope our (renovation) proposal gets circulated to the unit owners, because the trustee was very enthusiastic about it, at the same time, we are a lender and we have to collect our loan.”
Contact Kurt Schultheis at [email protected]