Judge puts furniture feud to bed

A U.S. bankruptcy trustee’s request for the right to sell everything inside the 232 units at The Colony Beach & Tennis Resort — even the kitchen sinks — will not be granted.

At a Wednesday, Nov. 10 hearing in Tampa, U.S. Bankruptcy Judge K. Rodney May denied a request by Colony bankruptcy trustee William Maloney that would have allowed him to sell the resort’s furnishings at a liquidation sale.

In a Sept. 10 motion, Maloney said he had made a deal with Colony Lender representatives David Siegal and Randy Langley to sell resort belongings. Siegal and Langley own the resort’s estimated $10 million bank loans and are the largest secured creditor in the resort’s Chapter 7 liquidation.

But May told those in attendance Wednesday “that he is not going to allow this process to go any further” in his courtroom.

May said he was surprised to learn that a brief filed Oct. 28 by the trustee shows that Maloney was interested in selling everything from hot-water heaters to kitchen sinks and cabinets.

“I don’t know whether this is a business solution or another step in the leverage tug-of-war game,” May said. “But it strikes me odd that if I have a deed to a unit there, someone can sell my sink, toilet and kitchen cabinets.”

May told all parties that a state court judge would have to determine the ownership rights of the items in question before the trustee could sell them.

Colony Lender attorney Michael Assaf proposed that May allow his client to sell furnishings such as mattresses and linens to move forward with a liquidation sale in some form.

But Colony Beach & Tennis Resort Association attorney Jeffrey Warren objected, arguing that Colony Lender only has rights to assets such as office computers and office furniture.

“It’s the first time I can honestly use this phrase: ‘They are trying to take everything, including the kitchen sink,’” Warren said.

Colony Association President Jay Yablon called the request “nothing more than an attempt to gain leverage in the resort’s future redevelopment.”

“This was a transparent effort by Langley and Siegal to strip such things as sinks and toilet bowls out of our owners’ units in an effort to obstruct the redevelopment of the Colony and increase what they perceive as their leverage over our association and its members to gain advantage as a redeveloper of the Colony,” Yablon said. “Fortunately, Judge May saw through their scheme, and put it to a well-deserved end.”

Siegal, however, said there was no scheme and maintains that whoever redevelops the Colony will throw out everything that’s there and replace it anyway.

“Any money coming out of a sale would have reduced the amount of judgment someone, including the association, would have to bid on to get the collateral of our loans,” Siegal said. “That’s what was behind this, and I thought it was a good idea. It wasn’t about forcing our will on anyone.”

If Colony Lender and the trustee still wish to sell the items in question, a Sarasota County 12th Judicial Circuit Court judge will have to determine if the sale of the items can move forward.

But after the hearing, Siegal told The Longboat Observer the argument over the furnishings is not Colony Lender’s focal point, and he will not pursue the matter further.

“What we are interested in now is finishing our foreclosure,” said Siegal, who explained that Colony Lender will have a January court date, so that a Sarasota County 12th Judicial Circuit Court judge can set the amount due and set a foreclosure sale date for the overdue loans it purchased from longtime Colony owner Dr. Murray “Murf” Klauber.

“The couches, chairs, toilets and sinks don’t mean anything,” Siegal said. “To deal with the furniture and furnishings while ignoring and not dealing with the real-estate issues that exist at the town level is like trying to rearrange the deck chairs on the Titanic.”

Contact Kurt Schultheis at [email protected].