A Chapter 11 bankruptcy reorganization plan, which three Dr. Murf Klauber-owned entities filed Tuesday, summarizes “a Global Compromise and settlement” among all parties is what will satisfy creditors.
The debtors’ reorganization plan, filed in the Tampa-based U.S. Bankruptcy Court’s Middle District of Florida, was submitted by three Klauber-owned entities: Colony Beach & Tennis Club Inc., Colony Beach Inc. and Resorts Management Inc. The three debtors filed for Chapter 11 bankruptcy Jan. 11, after Colony Lender LLC, which owns bank loans totaling more than $13 million on the Klauber entities and is waiting to be paid, filed a foreclosure action. Because the bankruptcy cases were filed prior to Colony Lender’s scheduled trial, the debtor’s assets have been preserved while a reorganization plan was created.
“The debtors intend to enter into a Global Compromise and settlement with the Association, the Partnership Trustee and the Klauber parties to resolve all outstanding litigation issues and disputes with such parties,” the reorganization plan states. “The resolution of such issues is intended to place, directly or indirectly, all strategic assets located at, related to or needed in connection with the successful operation of the resort in the hands of one party so that the resort can be returned to a minimum four-star resort level. Creditors will be paid, satisfied or released consistent with the Global Compromise.”
Longtime Colony General Manager Katie Klauber Moulton called the reorganization plan “pretty straight forward.”
“We are hopeful this plan will help to bring about a global resolution between all of the affected parties that resolves all of the issues,” Moulton said.
Moulton said she and her father are in the middle of the negotiations and that’s why not much more could be revealed at this time.
“The plan can be modified and we will continue to work on it until we have our first hearing,” Moulton said. That hearing is tentatively scheduled for June 20 in a Tampa courtroom.
Klauber attorney Charlie Bartlett couldn’t be reached for comment for this story. Bartlett, though, told the Longboat Key Town Commission last week at a Colony workshop he’s hopeful a settlement can be reached within the next 60 days.
The reorganization plan also states “the Global Compromise will memorialize, as an integral and permanent aspect of the resort, an appropriate recognition of the contribution of the Klauber family to the development and vision of the resort and the town of Longboat Key community. The Global Compromise may include a consulting agreement with the Klauber family in any rebuild or restoration of the resort. Certain property of the state and other non-debtor property, including the Rec Lease property, will be transferred to the appropriate designated party, free and clear of all liens, claims, encumbrances and interests of any kind except as otherwise expressly stated in this plan.”
A disclosure statement the debtors filed Tuesday in support of the reorganization plan states that without approval of the plan, two alternative options will occur:
• “A dismissal of the Chapter 11 cases would leave the parties in their pre-filing positions and would likely result in protracted litigation with the Association.”
• Or, “a Chapter 7 liquidation is unlikely to result in any significant distribution to unsecured creditors, primarily because the value of the debtor’s assets would be dwarfed by the asserted secured claims of Colony Lender and Bartlett’s Icard Merrill law firm.
Icard Merrill has secured three claims for $1,047,021, $658,492 and $521,480. Colony Lender has filed a secured claim for $13,612,775.71.
Colony Lender representative David Siegal told the Longboat Observer Tuesday the reorganization plan filed “is not a legitimate one.”
“I wish and I hope the Association and Klauber can find a developer that has a nice checkbook that can pay Colony Lender what’s owed and get the resort developed,” Siegal said. “But the reality is this bankruptcy case should be in Chapter 7 because Chapter 11 is meant for a viable ongoing business that needs to restructure itself and continue its business.”
Colony Lender has another foreclosure hearing scheduled for Aug. 26 in a 12th Judicial Circuit courtroom, at which time Siegal believes a judge will set an amount due on Colony Lender’s loans at approximately $14.2 million.
“If, by Aug. 26, they still haven’t managed to reach a settlement, we’re moving forward,” Siegal said.
Colony Beach & Tennis Resort Association President Jay Yablon said Tuesday evening he’s “hopeful the centerpiece of the plan states we are all working on a global settlement.”
“It confirms they are just as intent on achieving a global legal settlement as we are,” Yablon said.