The lender holding a mortgage on The Colony Beach & Tennis Resort property is moving forward with foreclosure proceedings against Colony Chairman and owner Dr. Murray “Murf” Klauber.
Longboat Key resident David Siegal, one of the partners of Colony Lender LLC, told The Longboat Observer Tuesday that he and his partner, Longboat Key businessman Randy Langley, are now pursuing two avenues.
“At this point, we are pursuing a revitalization of The Colony, while simultaneously moving a foreclosure forward as quickly as the legal system will accommodate (in Sarasota County),” Siegal said.
Siegal has not disclosed what Colony Lender paid in March 2009 to purchase the Colony’s $10 million in loans from Bank of America.
Colony Lender is currently working with U.S. bankruptcy trustee William Maloney and a number of other interested investors for a revitalization of the historic property at 1620 Gulf of Mexico Drive.
But Siegal said he can’t allow anymore time to go by without pursuing a foreclosure action on the bank loans his company owns.
“Enough time has gone by that I have to pursue both avenues,” Siegal said. “When I didn’t accomplish what I wanted to during that time period (a resort revitalization plan), we decided to pursue the other (bankruptcy) action as well.”
Siegal says he will not submit a reorganization plan to Tampa-based U.S. Bankruptcy Court Judge K. Rodney May because it’s up to the trustee to reach a solution now.
“Before, I thought it was incumbent upon us, as the main secured creditor, to solve the issues,” Siegal said. “Now the driver is the trustee.”
Sarasota attorney Gary Gassel has been hired by Colony Lender to begin executing foreclosure proceedings on the loans.
Pledged as collateral of the loan is the Colony recreation property, its restaurant, bar and hotel resort property. Klauber would retain the right to his office/living quarters penthouse and Vagabond beachfront unit.
Meanwhile, Colony President and General Manager Katie Moulton, who is still working at the resort in an advisory capacity under Maloney, is confident that the trustee will make the best possible decision for the resort.
“Mr. Maloney has been working with a number of different investor groups,” said Moulton, who said that the trustee closely monitors all of the resort’s activities and financial reports. “The goal is to find a resolution before there is a point where the resort runs out of cash.”
Maloney’s first official report on the state of affairs at The Colony has not been released yet.
Maloney will eventually tell May whether he believes the resort can be restructured through Chapter 11 bankruptcy, or if the case should be converted to a Chapter 7 liquidation.
Contact Kurt Schultheis at [email protected].