May grants Colony trustee’s auction request

U.S. Bankruptcy Judge K. Rodney May approved an emergency motion from Colony Beach & Tennis Resort Chapter 7 Trustee William Maloney this afternoon that allows him to move forward with bids and an auction for a $23 million judgment against unit owners this summer.

Maloney, who doesn’t foresee a settlement among Colony parties, and his attorney, Jordi Gusso, urged May to move forward with procedures that could lead to an August auction of a judgment that longtime Colony owner Dr. Murray “Murf” Klauber won on appeal against unit owners.

Maloney seeks to sell the judgment to Unicorp National Development President Chuck Whittall, which offered $3.5 million for the judgment, or a higher bidder with a better offer at auction. Maloney and Whittall, who already submitted a $200,000 deposit for his offer, have already signed a contract for the judgment.

“In the face of a $3.5 million cash offer, it’s appropriate to bring this forward to you,” Gusso said.

Gusso asked for a bid process for other parties to compete with Whittall’s offer that included the following parameters: an all-cash offer and a deposit that would amount to 10% of the amount of the total bid. The first available bid above Unicorp’s, Gusso said, should be set at $3.6 million.

Colony Beach & Tennis Resort Association Attorney Jeff Warren disagreed with May’s assessment and asked for a continuance of the motion, citing not enough time to review the motion and the motion being prejudice against his client.

Warren noted that the association asked May to consider barring Unicorp and Colony Lender from being qualified as active bidders as part of recent sanctions May levied against them.

May disagreed with most of Warren's points.

“The district court could wipe out the sanctions,” May said. “I’ve been surprised a number of times with (appeal court) decisions made and the lis pendens (lawsuits against unit owners) might be upheld. It makes more sense to schedule bidding and see where it leads.”

May called the trustee's motion and parameters reasonable. He later approved a request by the association to allow offers that include a combination of cash and other options including a waiver of claims and settlement agreements with parties that resolve other issues.

“You’re doing your fiduciary duty by bringing this to me,” May said.

Bids for the auction are due July 30. A hearing will be set in August or early September for an all-day hearing and auction for the judgment May will oversee. Appeals from the bids, which will be accepted until Aug. 15, are likely from the association.

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

Contact Kurt Schultheis at [email protected].