Colony judge amends ruling

U.S. Bankruptcy Judge K. Rodney May officially entered his ruling that converts the Colony Beach & Tennis Resort bankruptcy case to a Chapter 7 liquidation March 21, with one change from the oral ruling he made in February.

May made Colony Lender LLC, the bankruptcy case’s largest affected creditor, a secured creditor for up to $3.7 million in his March 21 ruling, noting that past case law confirms his decision.

In February, May had reached a different conclusion when he announced that Colony Lender LLC, was an unsecured creditor in its $3.7 million claim against longtime Colony owner Dr. Murray “Murf” Klauber’s Chapter 7 Partnership estate.

The ruling alteration means that Colony Lender will collect the first $3.7 million of any offer that Chapter 7 U.S. Bankruptcy Trustee William Maloney accepts for rights to a $25 million judgment that a U.S. Appeals court awarded to Klauber. That judgment was awarded against the Colony Beach & Tennis Resort Association for the failure of unit owners to pay assessments, which a judge said led to the closure of the resort in 2010 and damages.

The judgment, which is owned by Maloney as the trustee in the Chapter 7 case, can be sold to a developer or outside interest. The ruling, though, doesn’t prevent the association from trying to negotiate a settlement with Maloney so unit owners are not assessed for the $25 million judgment, which would cost more than $100,000 per unit owner.

The association, though, has more than $10 million in counter-claims it can use against Klauber’s Chapter 7 estate.

The rest of May’s written ruling was the same as his oral ruling. May dismissed a proposed Colony bankruptcy reorganization plan and, in doing so, also rejected a Colony settlement that was in the works for months.
 

MEETINGS & AGENDAS
• Town Commission Statutory Meeting — 7 p.m. Monday, March 31
• Town Commission Regular Meeting — 7 p.m. Monday, April 7
All meetings take place at Town Hall, 501 Bay Isles Road, unless otherwise noted.