Objections reveal Colony settlement alternatives

 

Objections reveal Colony settlement alternatives

 

Date: October 4, 2013
by: Kurt Schultheis | Managing Editor

 
 

 

 

A Colony Beach & Tennis Resort hearing scheduled for a Tampa-based U.S. Bankruptcy Middle District of Florida courtroom Oct. 10 just got much more complicated.

Not only does U.S. Bankruptcy Judge K. Rodney May have to review a proposed settlement and “Klauber Family Consulting Agreement,” but he now must review two objections to a settlement that offers money to longtime Colony owner Dr. Murray “Murf” Klauber and a U.S. bankruptcy trustee. That settlement, though, leaves out Colony Lender LLC, the bankruptcy case's largest affected creditor.

That settlement, if approved by May, signs over Klauber’s property (which still has liens on it from Colony Lender) to the Colony Beach & Tennis Resort Association, gives Klauber $3 million over five years through a consulting agreement and absolves the Association from a $25 million judgement for damages Klauber won in an appeals court last year. It also gives a U.S. trustee $2.3 million to pay off creditors.

Colony Lender LLC attorney Michael Assaf filed an objection Thursday to the settlement, insisting that May must deny such a settlement because Klauber can’t file for bankruptcy, sell assets in exchange for money and not pay off all the creditors.

Colony Lender owns bank loans on Klauber’s property and is seeking to collect on a recent judgment of more than $13 million.

In the objection, Colony Lender produces an exhibit that reveals Orlando-based Unicorp National Development Inc. managing member Charles Whittall submitted a letter on Sept. 30 to U.S. bankruptcy trustee William Maloney, offering to give Maloney $2.3 million in cash to pay off creditors that’s available as soon as May approves the offer. The settlement reached with the Association, Klauber and the trustee, meanwhile, gives the trustee $2.3 million over five years after a list of conditions are met. Those conditions include a vote of the unit owners to approve the settlement and the town’s approval of a future redevelopment project.

The exhibit also included a verification letter from Unicorp National Development’s bank, which verifies the company has more than $10 million in accounts.

Unicorp, a large retail, mixed-use and drug store developer, has also developed resort projects such as the Wyndham Hotel Orlando.

“As the largest creditor, Colony Lender endorses the offer of Unicorp and urges the trustee to seek approval of the offer,” states Colony Lender’s objection. “It is clear that Unicorp, a major developer with both adequate monies and experience to revitalize and/or redevelop the resort, is attempting to assemble under uniform control the individual assets necessary to form the contiguous whole required to redevelop the resort.”

On Wednesday, meanwhile, Colony unit owner Kenneth Byers Jr., an affected creditor in the bankruptcy case, filed a motion for extension of time to file a redevelopment proposal and obtain a different settlement agreement with Longboat Key-based MW Development Group. The company is working to negotiate settlement agreements Colony parties even though the company wasn’t selected by the Colony Beach & Tennis Resort Association to be the project’s developer.

Colony Association President Jay Yablon said May has a duty to review all objections filed this week, but expressed optimism the settlement his board of directors approved last month will be approved.

“Does anybody seriously believe that a federal judge is going to order the Association to do business with MW, or anybody else, as a development partner?” Yablon said. “Whatever other deficiencies it may have, that is just not the way our legal and economic system works."

For more information, pick up a copy of next week's Longboat Observer.

Contact Kurt Schultheis at kschultheis@yourobserver.com

 

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