Judge could rule on Colony settlement Wednesday

 

Judge could rule on Colony settlement Wednesday

 

Date: February 26, 2014
by: Robin Hartill | News Editor

 
 

You won’t find the details about U.S. Bankruptcy Judge K. Rodney May’s rulings on a Colony Beach & Tennis Resort settlement in this week’s issue of the Longboat Observer. That’s because May pushed back a hearing that was scheduled for Feb. 25 to 2 p.m. Feb. 26 in his Tampa bankruptcy courtroom.

Visit YourObserver.com Wednesday evening to learn what happened in court. In the meantime, we answer 10 commonly asked questions about the Colony. An earlier set of 10 commonly asked questions about the Colony is also available online at YourObserver.com.

1. What is May expected to rule about on Wednesday?
May is expected to rule on both the proposed settlement between longtime Colony owner Dr. Murray “Murf” Klauber and the Colony Beach & Tennis Resort Association and the Chapter 11 reorganization plan for Klauber-owned entities.

That settlement would give $3 million to Klauber through a consulting agreement and distribute $2.3 million to a U.S. bankruptcy Chapter 11 trustee to pay creditors.

The settlement also absolves the association of a $25 million judgment for damages Klauber won in a bankruptcy appeals court in 2012.

Colony Lender LLC, the largest affected creditor in the case, has opposed the settlement because it isn’t included in the agreement.

2. What is the status of the other litigation surrounding the Colony?
May canceled Colony Lender’s scheduled foreclosure sale of resort assets in early December; Colony Lender appealed the decision.

The association sued the town last month, seeking relief in the 12th Judicial Circuit Court from a town resolution that mandates the association increase the bond that the town can use to maintain the dilapidated property from $50,000 to $250,000. Judge Charles Williams has not yet ruled in that case.

Additionally, Sheldon and Carol Rabin, owners of two beachfront units, announced they could file an injunction in circuit court against the association, citing its failure to maintain existing buildings on the property.

3. Will May’s ruling be the last word on the settlement?
Not necessarily, because the parties can appeal. In fact, May told the parties in November that his rulings “will only be appealed” when urging them to reach a settlement.

4. Who will be responsible for paying a settlement?
The settlement will come from assessments that unit owners pay.

5. How many days worth of hearings has Judge May held since Klauber and the association announced the proposed settlement?
Seven: Oct. 10, Oct. 24, Nov. 22, Nov. 25, Dec. 3, Dec. 4 and Jan. 27.

6. Why is the Longboat Key Town Commission holding a March 4 hearing about the Colony?
In December, Town Manager Dave Bullock and Building Official Wayne Thorne told the commission that the buildings are a nuisance and a threat to the health and safety of the general public during a storm.
The commission scheduled the hearing to review building-by-building evidence about whether each structure is a public nuisance and the town needs to take action through its code process to have the buildings demolished.

7. What is the status of the property’s tourism use?
The commission extended the property its third extension in December until April 30.

Losing the grandfathered status would mean that the resort could lose its 134 nonconforming units.
The commission considered making the demolition of Colony structures a condition of the extension but learned in December it couldn’t legally do so.

8. Has the town ever drawn on the $50,000 bond the association originally posted?
No, although Bullock told the commission the town “went right to the edge of it on at least one occasion.”

Bullock’s original request was that the commission increase the bond from $50,000 to $100,000, but the commission opted to increase the required amount to $250,000 at a December workshop. The association argues in its petition for a writ of certiorari that “there was no competent substantial evidence indicating how the $250,000 was determined.”

9. How many units does longtime unit owner Andy Adams now own?
At least 60. Adams owns the units personally and through entities Colony Beach Investors and Breakpointe LLC. Colony Beach Investors purchased three of those units in 2014.

10. Are trespassing and vandalism still a problem at the Colony?
At press time, the last incident recorded in Longboat Key police reports occurred Jan. 21, when unknown individuals kicked the door of a unit open and broke fixtures and also made holes in the walls and doors. Longboat Key police released statistics for 2013 that revealed that vandalism and trespassing offenses rose 54% and 32% respectively in 2013 compared with a year ago — an increase Longboat Key Police Chief Pete Cumming attributes to incidents at the Colony.

Contact Robin Hartill at rhartill@yourobserver.com

 

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