- June 11, 2015
Like many familiar with the Colony Beach & Tennis Resort litigation, William Maloney is not optimistic.
Maloney, the Colony Beach & Tennis Resort Chapter 7 trustee who controls a $23 million judgment — which longtime Colony owner Dr. Murray “Murf” Klauber won on appeal against unit owners — doesn’t foresee settlement among Colony parties.
So in a June 3 motion, the trustee’s legal counsel suggested it’s time to sell the judgment for $3.5 million to an interested party: Orlando-based Unicorp National Development President Chuck Whittall.
On Thursday in his Tampa courtroom, U.S. Bankruptcy Judge K. Rodney May will review a motion in which Maloney seeks to sell the judgment to Unicorp for $3.5 million or hold an auction June 26 to determine if anyone is willing to submit a better offer than Unicorp’s. Maloney and Whittall have already signed a contract for the purchase of the judgment.
Association President Jay Yablon said the association will object to the sale, noting that such a sale to Unicorp would reverse what May’s sanctions order against Unicorp and Colony Lender accomplished.
On May 15, Yablon told the Longboat Observer the sanctions stop Unicorp’s plans “of driving people off the property and scaring them into selling their units.”
If the judgment is sold to a developer, the sale would bring legal and financial risks for Colony owners.
If Unicorp, for example, buys rights to the judgment, unit owners could be exposed to a $23 million liability that would be assessed at a cost of more than $100,000 per unit owner.
Maloney noted that Unicorp has offered $3.5 million in cash and delivered a $200,000 deposit into a trust account. It has agreed to pay the trustee the additional $3.3 million in cash to the partnership if May approves the sale.
“The trustee believes it is time to efficiently monetize the assets of the estate,” the motion states.
It also notes that all association settlement efforts have failed.
Sanctions ordered against Whittall and Colony Lender LLC principals David Siegal and Randy Langley, though, could play a big factor in May’s decision to either approve or deny Maloney’s request.
On May 12, May ordered all three parties to dismiss lawsuits against all Colony unit owners, in which Colony Lender and Unicorp seek more than $5 million in damages for unpaid rent plus interest on a disputed recreational facilities lease. May ruled that those letters violated an automatic bankruptcy stay. On June 5, May requested the association submit memos for a cost and damages study to assess what the parties should be required to pay for their actions.
Asked how the acquisition of the judgment would impact unit owners, Whittall said: “We’re trying to acquire all the fundamental pieces of the Colony. What we do with these pieces is yet to be determined. But we’re hopeful a sale will move along redevelopment of the resort.”