Who’s who in the case of the Colony Beach & Tennis Resort

The once iconic resort at 1620 Gulf of Mexico Drive remains shuttered after nearly five years. The following players hold key roles in determining its future.

U.S. Bankruptcy Judge K. Rodney May

U.S. Bankruptcy Judge K. Rodney May announced at an April 14 hearing that he plans to file an order against Colony Lender LLC and Orlando-based Unicorp National Development Inc. for a list of sanctions.

But the sanctions aren’t official until May enters a written order detailing the sanctions. 

May indicated during the hearing that he will file the ruling within weeks.

Colony Lender and Unicorp will appeal that ruling, according to Colony Lender principal David Siegal.

May is the judge whose 2010 ruling ultimately gave owners possession of their units, leading the Colony to close.

U.S. Middle District of Florida Judge Steven Merryday

U.S. Middle District of Florida Judge Steven Merryday will hear the appeal.

Merryday is the judge who reversed 2009 rulings by May in 2011 and ordered May to determine damages against the association.

Until Merryday rules, U.S. bankruptcy trustees are unable to hold sales to distribute money to bankruptcy creditors, which could eventually lead to a redeveloped resort on the Colony property at 1620 Gulf of Mexico Drive.

May could approve bankruptcy sales pending Merryday’s decision, but appeals must be exhausted before a date for those sales can be set.

What About Murf?

Longtime Colony Beach & Tennis Resort owner Dr. Murray “Murf” Klauber may no longer be in control of the Colony, but he’s still got a stake in bankruptcy proceedings. 

Klauber is still a partial debtor of Colony Investors Inc., a corporation that could receive payment from a future bankruptcy sale. He has interests in three entities subject to bankruptcy proceedings and future sales. 

One of those entities, Resorts Management Inc., is a general partner of Colony Beach & Tennis Resort Ltd., which still has a claim against the association. The association is still appealing a judgment of approximately $23 million against it.

Could Klauber be involved in a future resort?

“Some participants have expressed an interest in completing the development and have indicated they would like Dr. Klauber to be involved,” said Klauber’s attorney, Charles Bartlett. “But his stake in a future development depends on how everything shakes out.”

Past redevelopment proposals have included a Klauber tribute area at the resort, which the Klauber family turned into an iconic tennis resort hotel in the 1970s and 1980s.

The role of the trustees

U.S. Trustee Douglas Menchise is in control of everything relating to the recreational lease and damages for that lease. A rec lease damage claim judgment against the association for approximately $2.5 million has not been awarded. 

U.S. Trustee William Maloney controls the former partnership and its assets between the hotel operator (Klauber) and the Colony Beach & Tennis Resort Association, which comes with the responsibility of settling a judgment of approximately $23 million against the association that Merryday issued in 2012. The association has appealed that judgment. Maloney’s main goal is to settle $23 million worth of claims from that judgment when he is ordered to set a bankruptcy sale. 

Settlement

The only way the Colony site could be redeveloped sooner is if all parties agree to a settlement. The following parties would need to agree to the settlement:

1. David Siegal and Randy Langley

David Siegal, an attorney, and Randy Langley, a real estate developer, are the principals of Colony Lender LLC, which is awaiting sanctions from May for violating a bankruptcy stay. Colony Lender LLC plans to appeal.

Siegal and Langley purchased overdue bank loans on resort property controlled by longtime Colony owner Dr. Murray “Murf” Klauber, including an 80% interest in the 2.3-acre recreational property from Bank of America in 2010 for $4.5 million, followed by a 15% interest in the property.

It received a judgment of more than $14.3 million in a September 2013 foreclosure trial and placed the winning bid in July 2014 to become 95% owner of the recreational property and 100% owner of the other properties.

Colony Lender sued unit owners for more than $5 million in damages over the recreational facilities lease, but, as part of the sanctions, May will require Colony Lender to dismiss those claims and, with Unicorp, write a letter to unit owners stating that claims against them have been dismissed.

2. Chuck Whittall

Chuck Whittall is president of Orlando-based Unicorp National Development, which has an agreement to purchase Colony Lender’s resort assets. Like Colony Lender, Unicorp is awaiting sanctions from May for violating the bankruptcy stay.

3. Jay Yablon

Representing Colony unit owners

Jay Yablon, a Schenectady, N.Y.-based patent trademark and copyright attorney, serves as the voice of most unit owners in his role as president of the Colony Beach & Tennis Association’s board of directors.

Unit owners have had possession of their units since 2010, when May converted the Colony’s Chapter 11 bankruptcy reorganization with its unit owners to a Chapter 7 liquidation. The conversion dissolved the partnership that ran the Colony and converted the Colony from a hotel resort to a condominium association.

4. Andy Adams

Tennessee developer Andy Adams and his entities, including Colony Beach Investors Inc. and Breakpointe LLC, own 71 units, or approximately 30% of units, on the property. Because future development plans and/or settlements could require approval of 75% of unit owners, Adams will play a key role in the resort’s future.

Adams’ Breakpointe LLC also owns a 5% interest in the recreational property.