Andy Adams bid $15.2 million in an auction for key Colony Beach & Tennis Resort properties at a Monday auction in Sarasota County Court. Colony Lender LLC, which won a foreclosure judgment of $14.3 million against the property last September, bid $1 more.
But Adams didn’t bid another dollar — and Colony Lender won another 80% of a 2.3-acre recreational property in the middle of the shuttered resort, plus 100% ownership of the restaurant complex and the former penthouse office of longtime Colony owner Dr. Murray “Murf” Klauber. Colony Lender already owned a 15% interest in the recreational property, bringing its total interest to 95%. Adams owns the remaining 5%; he also owns approximately 27% of the Colony’s 237 units.
Colony Lender doesn’t plan to play a role in the long-term future of the resort, according to principal David Siegal. He said Colony Lender has an agreement to transfer assets in the resort to Orlando-based developer Unicorp for an undisclosed price.
“I want to get taken care of in the offer and leave the Colony in my rearview window,” Siegal said Monday.
Colony Lender previously purchased overdue bank notes on the properties from Bank of America for a rumored $4.5 million. It received a judgment of more than $14.3 million in a foreclosure trial last September, which increased as interest accrued.
Had the winning bid been less than the amount that Colony Lender was owed (about $15 million), including interest, it could have pursued payment for the difference.
Credit bidding is a right that creditors have in bankruptcy sales and auctions, allowing a creditor to bid the full amount of its claim without offering any cash up to the amount of its claim.
“The mortgage is way more than the property’s worth, so we bid on it to do away with the credit bid right that Colony Lender had,” Adams said. “They used up their credit bid balance, and now, they have to use real money.”
Unicorp President Chuck Whittall said Tuesday the company is willing to pay to acquire additional assets.
“Our plans are to remove the eyesore and build something the town of Longboat Key can be proud of,” Whittall said.
Whittall said his company is in the process of designing a five-star resort that will consist of a 160- to 175-room hotel, along with a couple hundred condo and tourist units.
He said that Unicorp will engage unit owners but said he does not believe they will be able to block development of the 2.3 acres. He plans to submit pre-application materials to the town within 60 days without seeking unit owner approval.
Jay Yablon, president of the Colony Beach & Tennis Association, which represents unit owners, criticized Colony Lender’s rejection of Adams’ $15.2 million offer “in favor of pursuing what will be a doomed scheme with Unicorp to try to force the Colony unit owners to sell their Colony interests for next to nothing…” he wrote in a statement to the Longboat Observer.
Yablon said unit owners have received proposals from Unicorp that they didn’t regard as serious.
“Let Unicorp present something other than suing all the owners and stealing their titles, and we’ll see if we have something to talk about,” he said.
Whittall described unit owners as unrealistic.
“They basically wanted a developer to come in and build a unit and give it to them,” he said.
A separate auction that U.S. District Judge Steven D. Merryday canceled in June has not yet been rescheduled. In that auction, developers will bid on the right to negotiate with unit owners and could also use a winning bid to assess damages for a $23 million judgment Merryday previously awarded Klauber.
Whittall described obtaining the $23 million judgment as “one of several pieces of the puzzle we plan to pursue.”
“The battle’s not over, but we believe that what happened yesterday is a fundamental step in bringing this to approval,” he said.
Yablon, however, criticized Colony Lender for opting “to try to team up with Unicorp to take over the entire Colony from the unit owners.” He ended his statement with a saying he says is now his motto: “Pigs get fed; hogs get slaughtered.”
Does Colony Lender have to write itself a check for $15,200,001?
No. By paying $15,200,001, Colony Lender erased the debt it was owed but didn’t have to fork over the money in cash.
What impact could Monday’s auction have on the auction of the bankrupt Partnership estate?
Colony Lender LLC will have to bid on the estate like every other bidder. The bankruptcy court is required to accept the “highest and best” offer for the Partnership estate, according to bankruptcy code. “Highest” isn’t subject to interpretation, but “best” could be interpreted according to a number of factors, including whether the offer comes with a settlement of litigation.
What role does Andy Adams hope to play in the development?
Adams declined to say whether he hopes to be part of developing the Colony but told the Longboat Observer:
“I’m interested in anything that will get the unit owners back in their properties as quickly as possible.”
Adams said his Breakpointe LLC and other entities will do whatever they can to fight the $23 million judgment awarded to the bankrupt Partnership estate.
Contact Robin Hartill at email@example.com