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Longboat Key Mon Oct 5, 2009 5 years ago

Colony to reorganize in bankruptcy court

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by: Kurt Schultheis Managing Editor

The Colony Beach & Tennis Resort’s hotel operating corporation will file for Chapter 11 bankruptcy in the Tampa-based U.S. Bankruptcy Court’s Middle District of Florida, according to Colony President and General Manager Katie Moulton.

In a press release issued late Monday, Moulton said the hotel corporation, Colony Beach & Tennis Club Ltd., would reorganize its limited partnership in bankruptcy court “to protect the long-term viability of the resort.”

The resort, the press release states, is a condominium-hotel operated by a limited partnership and is dependent on the cooperation and funding of certain expenses of the condominium buildings and common areas by its condominium association.

Moulton blames the association’s board of directors for “crippling operations of the resort” by not paying and funding certain expenses in an attempt to force the general partner to surrender the resort to the association.

In a released statement, Colony Chairman and owner Dr. Murray “Murf” Klauber, who is also the general partner of the resort, explained his reasoning for the bankruptcy filing.

“This was an extremely difficult and challenging decision to make; however, with the compelling counsel from our experts we feel this step is essential in allowing The Colony to recover from the financial distress the association has forced upon the resort,” Klauber said.

The news comes two weeks after The Colony, in its 40th year in business, closed the doors to its hotel operations until further notice.

The shuttering of the hotel was made two months after a federal bankruptcy judge ruled the association’s board does not have to assess unit owners  $14.1 million in resort repair costs. Moulton said the Colony is appealing the judge’s rulings.

Foreclosure proceedings are also ongoing in Sarasota County  against Klauber and seven of his resort corporations, alleging they have defaulted on three loans whose outstanding amounts total $8.02 million.
On Friday, Oct. 2, Klauber withdrew his appeal of the foreclosure proceedings.

For the complete story, including how Klauber’s decision to file for bankruptcy affects the foreclosure proceedings, pick up a copy of the Thursday, Oct. 8 Longboat Observer.

Contact Kurt Schultheis at kschultheis@yourobserver.com.

 

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