Will one day in court yield years of progress for Colony?

The largest piece of the Colony Beach & Tennis Resort’s six-year federal bankruptcy puzzle is now in place. And according to Colony Beach & Tennis Association President Jay Yablon, that piece “means we are probably two to three years closer to having a redevelopment at the Colony than we were 10 days ago.”

U.S. Bankruptcy Judge K. Rodney May awarded the Chapter 7 Partnership estate — which includes the coveted $23 million judgment against unit owners — to the Colony Beach & Tennis Association Tuesday, in his Tampa courtroom. 

For the future of the Colony, the ruling means the largest piece of the bankruptcy matter is settled, and development might happen sooner rather than later. For the association, the ruling means unit owners can bury a judgment developers could use against them to redevelop the resort.

And even Unicorp National Development President Chuck Whittall, whose company has an agreement to purchase a disputed recreational property on the resort from Colony Lender LLC, had words of optimism.

Whittall expressed a willingness to work with the association to develop the property after the hearing, even though he didn’t win the judgment. 

“All along we’ve said we were trying to clear the chess pieces off the table to get the project redeveloped,” Whittall said. “The judgment today was one of the major obstacles in redeveloping the property.”

An auction that originally attracted four bidders for Maloney’s estate never happened after U.S. Bankruptcy Trustee William Maloney’s attorney, Jordi Gusso, announced Tuesday morning that Maloney reached an agreement with the association over the weekend that he believed was the best offer — even though it wasn’t the highest cash bid.

That’s because only the association had the power to waive approximately $30 million in unit owner claims as part of an offer that also came with $2.5 million in cash to pay estate creditors and an additional $500,000 in escrow for other claims that may arise.

May approved the settlement even though Unicorp National Development LLC had a $3.5 million bid that it raised to $4.5 million, and representatives from Windermere-based Bluewater Oceanfront Investments LLC, a new Windermere-based corporation that was formed July 17 by registered agent Robert Butler LLC, placed a $4 million bid for the estate. Bluewater officials indicated it was willing to bid higher.

New Hampshire-based Naeco LLC, a company with ties to Ocean Properties LLC, did not attend the hearing, and its bid wasn’t considered.

None of the qualified bids, though, were ever really considered by May in the end.

“This hybrid proposal by the association resolves all claims,” May said. “In the trustee’s view, the proposal brings a higher level of certainty to most parties, even without knowing how high the bidding might have gone today. I realize it seems discourteous to invite the other bidders to dinner without serving a meal…but that’s what’s happened here.”

May said bidding for the estate could have reached $10 million.

“But then, you would still have litigation for years over the unit owner claims,” May said.

“While there are still some issues that remain outstanding to be resolved, we have now taken the giant step of settling all of the litigation at the Colony, which began in 2007,” Yablon said. “With these major chunks of litigation behind us, we will be shifting our priority over to redevelopment efforts and cleaning up the miscellaneous minor issues that still remain.”

It was the second estate the association acquired in the past four days that will pay creditors to end the bulk of the six-year bankruptcy case.

The association purchased a triple debtor Colony bankruptcy estate for $3.1 million Sept. 4, that allows creditors to be paid 100% of what they are owed.

‘This settles disputes and doesn’t perpetuate further litigation,” said association attorney Jeffrey Warren.

Whittall said he won’t appeal May’s rulings to award both estates to the association.

Whittall said the ruling works to his benefit even though his attorney, Michael Assaf, argued against parts of the settlement.

The remaining hurdle is a ruling on the rec lease and who owns its.

Whittall said he’ll be reaching out to the association “to figure out a way to develop the property.”

“We’re not giving up the rec property and our lease,” Whittall said. “The property will be ultimately redeveloped by us.”

Yablon said the association “is certainly open to discussions with anyone who can fairly and reasonably aid us to get the Colony redeveloped.”