Colony Lender demands $5.1M

 

Colony Lender demands $5.1M

 

Date: August 20, 2014
by: Robin Hartill | Managing Editor

 
 

Attorney David Siegal is seeking $5,116,664.24 within 20 days from owners at the 237-unit Colony Beach & Tennis Resort. If he doesn’t get it?

“Then we’ll file 237 lawsuits in 20 days,” said Unicorp National Development Inc. Chuck Whittall, who has an agreement to purchase Colony Lender’s resort assets.

Siegal sent a demand letter to unit owners Friday, seeking $522,387.84 in unpaid real estate taxes and interest in addition to $4,594,276.40 in damages for unpaid rent plus interest on a 99-year recreational facilities lease for the period from Oct. 29, 2008 to the present.

The final sentence of the letter states:

“THIS IS AN ATTEMPT TO COLLECT A DEBT. ANY INFORMATION OBTAINED IN CONNECTION WITH THAT EFFORT SHALL BE USED SOLELY FOR THAT PURPOSE” (sic).

With 15 days remaining until the deadline, it’s safe to say owners aren’t ready to open their checkbooks.
“More than anything, people are just outraged by it, and they recognize that this is nothing more than an effort to scare people into selling their units,” said Jay Yablon, president of the Colony Beach & Tennis Association on Tuesday afternoon.

Colony Lender’s interests in the shuttered resort now include a 95% interest in a 2.3-acre recreational property at the center of the resort plus 100% ownership of the restaurant complex and the former penthouse office of longtime Colony owner Dr. Murray “Murf” Klauber.

The letter states that Colony Lender could pursue unit owners for the remaining term of the lease from Oct. 29, 2008 through Nov. 29, 2072 — an amount it says is $42,306,000, not including rent increases or reduction to property values — if it doesn’t receive payment by the deadline.

Whittall told the Longboat Observer he will pursue damages of $42,306,000 from unit owners for unpaid rent on the lease through Nov. 29, 2072 regardless of whether unit owners pay the amount Colony Lender seeks in the letter.

Whittall seeks to build a 160- to 175-room hotel on the property, along with a couple hundred condo and tourist units.

Yablon responded to the demand letter in a Friday evening email to unit owners in which he wrote that Unicorp and Colony Lender “are at the very heart of a hostile strategy to take over the Colony without protecting the Unit Owners or providing fair value to them.”

Colony Lender previously purchased overdue bank loans on the Klauber-controlled properties, including an 80% interest 2.3-acre recreational property, from Bank of America for a rumored $4.5 million. Later, the company purchased a 15% interest in the 2.3-acre property.

Colony Lender received a judgment of more than $14.3 million in a foreclosure trial last September, which increased by several hundred thousand dollars as interest accrued each month. It placed $15,200,001 in a July auction to become 95% owner of the recreational property and 100% owner of the other properties.

Colony Lender and Unicorp contend that the recreational facilities lease transferred to them during the auction. The association, however, argues that Colony Lender owns only real property at the resort.

Because Colony Lender bid an amount higher than the judgment, the association argues that Colony Lender is now a landowner and has no monetary claims against unit owners.

Not surprisingly, Whittall disagrees with the association’s positions.

“The collateral we now have is where the tennis courts and the restaurant and the pool are set,” he said. “Why we would own that but not own the lease to that is beyond me. It’s our property. It’s irrefutably ours.”

In an Aug. 6 letter, Whittall outlined four options for unit owners who would be willing to deed their units to Unicorp (see sidebar). Owners who agree to any of the above options would not face future liability.

Unicorp also continues to pursue a $23 million judgment against the Association that U.S. Bankruptcy Trustee William Maloney controls in the Klauber Partnership’s Chapter 7 liquidation case.

The parties are scheduled to appear at 2 p.m. Thursday, in U.S. Bankruptcy Judge K. Rodney May’s Tampa courtroom for a status conference. May will not rule at the hearing but will hear updates from the parties. Still, observers can still count on an eventful day in court.

Declining to discuss specifics, Yablon said:

“We believe they are in violation of one or more court orders.”

An offer they can’t refuse?
Unicorp National Development Inc. President Chuck Whittall said Friday afternoon that his company has made deals with eight owners to deed their units in exchange for $20,000 cash. The cash offer was one of four options Whittall presented to owners in exchange for their units in an Aug. 6 letter. Other options included seven free nights at a new hotel annually over a five-year period or 10% off a new condominium or tourist unit.

Whittall said he plans to close the sales immediately.

 

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