May grants Colony trustee’s auction request

U.S. Bankruptcy Judge K. Rodney May quickly corrected an attorney when he described a Colony Beach & Tennis Resort matter he believed.

“No, that was two year ago,” May said. “This case is entering its sixth year of ongoing litigation this summer.”

Colony Chapter 7 Trustee William Maloney’s attorney, Jordi Gusso, quickly responded: “Time flies when you’re having fun, judge.”

May smirked at the comment, but made one thing clear later during the June 4 hearing in his Tampa courtroom: He won’t let appeals or past decisions mire the way he handles the case in the future.

“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 approved an emergency motion from Colony Beach & Maloney that allows him to move proceed with bid and auction procedures for a $23 million judgment against unit owners this summer.

Maloney, who doesn’t foresee a settlement among Colony parties, urged May to move forward with a process 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, who 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.

“The district court could wipe out the sanctions. 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.” — U.S. Bankruptcy Judge K. Rodney May

May called the motion and parameters reasonable.

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

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 last month to consider barring Unicorp and Colony Lender from being qualified as active bidders as part of recent sanctions May levied against them.

Warren also said that Unicorp and Colony Lender’s appeal of the sanctions means that lawsuits levied against unit owners that May ordered to be lifted remain in place for the time being.

“That’s a disadvantage to unit owners and those looking to bid on something that has a lawsuit pending on it,” Warren said.

May disagreed with Warren on several points.

Warren said a settlement the association proposed to Maloney in May that included wrapping up issues with other parties (minus Colony Lender and Unicorp) wasn’t considered.

“We think the trustee hasn’t exercised good business judgment by attempting to sell the asset for cash instead of even considering a settlement that resolves more than half the claims in this case,” Warren said. “And we think they (Colony Lender) don’t come to the court with clean hands.”

U.S. Trustee Douglas Menchise, who controls everything regarding a disputed recreational lease and a rec lease judgment for $2.5 million, also objected to Maloney’s motion.

“The court has yet to determine who owns what for the (rec lease) asset,” said Menchise, who said a bigger asset shouldn’t be sold before the rec lease matter is determined.

Michael Assaf, attorney for Colony Lender LLC, took offense to Warren’s comments, noting Unicorp made the judgment offer.

“Unicorp is trying to assemble the pieces, not Colony Lender,” Assaf said. “Colony Lender is being acquired by Unicorp and has nothing to do with this.”

Assaf said no other party has put up cash offers for Colony auction pieces like Unicorp.

“Because of hard feelings about Colony Lender, they (the association) are unfairly making Unicorp out to be evil,” Assaf said. “The truth is Unicorp has the only skin in the game because they are the only one willing to write a check.”

Assaf said if developer and Colony unit owner Andy Adams would have put up $15 million as part of a proposed association settlement that went awry two years ago, the case would be resolved.

The comment irked May, who cut off Assaf’s speech.

“That’s totally out of bounds,” Assaf said. “Stop, stop, stop. You’re out of bounds on several points.”

Gusso noted that the association and other parties still have a right to object to a future sale.

“We came hand in hand with the association in 2013 with a settlement,” Gusso said. “But the big void was an absence of cash. There’s an all-cash offer on the table and the trustee is simply trying to maximize the recovery of its asset.”

After Gusso’s speech, May granted Maloney’s motion.

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 for the bids and auction process will be accepted until Aug. 15.

The association was granted a bit of relief, though, from its objections to Maloney’s motion when Warren convinced May to relax Gusso’s all cash offer parameters.

Warren pushed for offers that include both cash and/or a combination of parties agreeing to a waiver of claims to resolve issues.

“I’m arguing for more than just cash,” Warren said.

After a short recess so Maloney could consider the request, Gusso announced the trustee is agreeable to offers that he can deem appropriate for both cash and/or a waiver of claims/settlements with parties.