Colony rec lease settlement delayed

A six-hour Colony Beach & Tennis Resort hearing Friday in Tampa-based U.S. Bankruptcy Judge K. Rodney May’s courtroom ended with another ruling delay.

May postponed awarding the sale of a long-disputed recreational lease, which comes along with a $2.5 million judgment that U.S. Bankruptcy Chapter 7 Trustee Douglas Menchise controls, until Sept. 4 at the earliest.

May agreed to a request by Colony Beach & Tennis Resort Association Attorney Jeffrey Warren to hold an evidentiary hearing 9:30 a.m. Sept. 4.

The hearing will decide whether Menchise acted in bad faith and didn’t provide sound business judgment when he rescinded a $600,000 association agreement Aug. 6 in favor of a $1.4 million cash settlement agreement with Unicorp National Development President Chuck Whittall.

The association agreement expired and contained a mutual mistake of fact. Whittall then reached a settlement with Menchise on Aug. 7.

Warren urged May to consider Menchise undermined the association agreement and requested the hearing. Warren plans to call Menchise, Whittall and other potential witnesses to the stand as witnesses Sept. 4 to make his case for why the agreement shouldn’t be blessed by May. Unicorp attorney Michael Assaf can also call witnesses to the stand in the hearing.

May agreed to grant the request, even though he denied the approval of the former association settlement, to make sure the agreement is fully vetted before he approves it to avoid another appeal. May will consider other offers for the rec lease and its judgment Sept. 4.

May made the decision even after Unicorp offered to boost its offer for the rec lease and judgment another $100,000.

May also ruled that Unicorp is a qualified bidder for auctions.

Warren has argued for months Unicorp wasn’t a qualified bidder because sanctions were issued against the company and Colony Lender LLC principals for trying to seek money from unit owners associated with a rec lease judgment Unicorp believes it already owns.

“We’ll deal with the issues next week and people can overbid for the judgment,” May said.

Contact Kurt Schultheis at [email protected].