The Colony Beach & Tennis Resort’s hotel operating entity filed a Chapter 11 bankruptcy reorganization plan Friday, Jan. 29, which states it intends to return the resort to a first-class, luxury destination with the help of an investor and unit-owner equity contributions.
The plan says that Colony Chairman and owner Dr. Murray “Murf” Klauber’s reorganization goal can be accomplished by renovating the current resort for a price tag of $20 million.
The renovations, according to the plan submitted in the Tampa-based U.S. Bankruptcy Court’s Middle District of Florida, will be funded by cash flow from the operations, limited partner contributions, investments obtained by the sale of some stock sold by Klauber (the general partner) and a contribution, loan or investment made by Klauber.
In order to generate cash for the payments required to fund the renovations, the plan states Klauber will sell 70% of his equity interest in another one of his entities, Resorts Management Inc.
The investor who pays for 70% of Klauber’s stock would then oversee, or control Klauber as general partner of the resort, including all businesses that exist on-site.
Klauber is seeking at least $3.78 million for the 70% of the stock and is asking the judge not to put a timeline on how long it takes to find an investor to buy the stock.
Colony President and General Manager Katie Moulton said it could take days, weeks or months to find the right investor.
“We are working with a number of very interested and qualified investors,” Moulton said. “I don’t anticipate it will take long, but we can’t put a timeline on it.”
According to the plan, once renovations are made to the property, profitability will return to the resort within two years of the renovation being complete.
The plan states that Bank of America, Klauber’s main debtor that is seeking to foreclose on the property, would be paid in full in 12 months once the judge certifies the plan.
A list of creditors filed in bankruptcy court reveal that the hotel’s operating corporation owes approximately $1 million to the 20 largest unsecured creditors. Thousands of dollars are also owed to several other creditors listed in the bankruptcy filing.
The rest of the creditors, the plan states, would be paid back over a period of five years.
To obtain part of the $20 million needed to make the renovations, the plan proposes offering four options for unit owners to have continued involvement in the resort’s operations and retain the right to receive future monies and certain resort benefits. Each option requires a payment of capital to assist in the reorganization.
• Platinum-status participants must contribute $85,000 to receive an additional week of free unit use in the off season a year after contributing; pay only 50% of the fee for use of the recreational facilities; pay no fee to retain the owner’s closet in their unit; receive a seat on the resort’s advisory panel; and be entitled to a pro-rated distribution of 50% of Klauber’s profits.
• Gold-status participants must contribute $60,000 to receive an additional three days of free unit use in the off season a year; pay only 75% of the recreational use fees; pay $100 annually to retain the owner’s closet in their unit; receive a seat on the resort’s advisory panel; and be entitled to a pro-rated distribution of 25% of Klauber’s profits.
• Silver-star status participants must contribute $35,000 and will pay 100% of the recreational use fees; pay $250 annually to retain the owner’s closet in their unit; receive a seat on the resort’s advisory panel; and be entitled to a pro-rated distribution of 15% of Klauber’s profits.
• Investor participants must contribute $20,000 and will pay 100% of the recreational use fees; pay $500 annually to retain the owner’s closet in their unit; receive a seat on the resort’s advisory panel; and be entitled to a pro-rated distribution of 10% of Klauber’s profits.
Those who choose not to contribute any money to the reorganization plan will pay 100% of the recreational use fees; pay $1,000 annually to retain the owner’s closet in their unit; receive a seat on the resort’s advisory panel; receive no profits; and will be the last units on site to receive refurbishments or repairs.
The bankruptcy judge has already made it clear, however, that all unit owners, regardless if they choose to make a capital contribution, will retain the right to use their unit for 30 days each year.
But unit owners will be required to pay daily fees for use of tennis and other recreational facilities unless they choose to make a capital contribution.
It could take anywhere from 60 days to several months for the judge to make a decision on the resort’s plan and disclosure statement that was submitted last month.
The resort’s association and its creditors, however, can object to the plan by filing motions in court at any time.
“We may be sent back to the drawing board,” Moulton said. “And objections could provide us valuable insight on how to make our plan better.”
Moulton is also hopeful the entire reorganization process can resolve itself out of court.
“It’s entirely possible all of this could be resolved in the next month or two with an outside investor who may go directly to the association and work out a plan directly with them,” Moulton said.
In the meantime, the Colony currently has 73 out of 232 units up and running and plans to open 27 more units this spring.
Jay Yablon, president of the Colony Association Board and chairman of its legal committee, had no comment on the reorganization plan at this time.
“Bankruptcy law has very stringent requirements that have to be followed once a reorganization plan is submitted,” Yablon said.
The Colony Beach & Tennis Club Ltd. presented the following liquidation analysis as part of its bankruptcy reorganization plan last month.
Cash on hand1 $72,500
Unit interior furnishings2 $190,000
Inventories of linens, housewares and supplies3 $178,000
Vehicles, office furniture and equipment4 $32,000
Estimated secured claims6 $3,944,164.69
Estimated priority claims (customer deposits) $60,000
Estimated Chapter 7 administrative claims $20,000
Estimated Chapter 11 administrative claims5 $381,400
Total available for unsecured creditors $0
1. Includes estimated advance deposits for guest stays of $60,000
2. Estimate bulk sale value based of more than 230 units worth of furnishings, televisions, appliances, etc.
3. Estimated bulk sale based on typical par inventories
4. Estimate of salvage or scrap value
5. Includes advance guest deposits, estimated vendor accounts payable as of Jan. 31 and DIP loan with interest through Jan. 31
6. Based on filed proofs of claim and includes $3,742,080.25
Contact Kurt Schultheis at email@example.com.
Currently 1 Response
- Hi Observer folks, you have a nice paper and I would like to
email this article on the colony to someone who liked to stay
there and would be very interested. Is there a way to do it?
10 Sarasota Singles Society Salutes the Sunset!
6:00 pm - 9:00 pm
12 Dog Days of Summer Adoption Event
11:00 am - 3:00 pm
17 L'Europe UnCorked!
6:00 pm - 7:30 pm
18 Jewels on the Bay Showhouse
10:00 am - 4:00 pm
Mote-tagged shark swims toward Sarasota
A 14-foot, 2,300-pound great white shark is currently heading eastbound toward Sarasota.
Police get a wheel deal from anonymous citizen
An anonymous citizen recently contacted the town with an offer to buy the Longboat Key Police Department a new bicycle.
Surprise daytime turtle encounter
On his evening beach walk, Longboat Key resident Mike Haycock was in for a big surprise when he spotted a sea turtle coming out of the water Sunday.