|

Colony sale on-hold by appeal, Ocean Properties makes proposal

STEVE REID
Editor & Publisher
sreid@lbknews.com

Although there is little literal movement these days at the Colony Beach and Tennis Resort, the past week swirled with activity as competing parties struggled to gain a stake in the 18-acre Longboat Key resort property.

The primary news is the sale of a $23 million judgment in Colony Murf Klauber’s Chapter 7 bankrupt estate, which was scheduled for June 19, was put on hold by U.S. District Judge Steven Merryday following a motion by Colony Lender that the rules of the auction would injure their rights and have severe financial consequences.

Colony Lender is the largest secured creditor in the estate and argued to Judge Merryday that the auction terms should allow them to credit bid the full amount of its $3.75 million secured claim against the Chapter 7 estate.

The auction was supposed to occur in U.S. Bankruptcy Judge Rodney May’s courtroom and Judge May set the condition that any party wishing to participate in the courtroom auction on June 19 had to submit a proposal and post 10% of its anticipated opening bid amount no later than 4 p.m. on June 18.

 

Three emerge with bid proposals

Three parties filed bids by the end of day June 18, with a new-to-the-Colony and yet familiar-to-Longboat-Key party entering the arena, Ocean Properties, Ltd.

Ocean Properties posted the highest bid by end of day Wednesday, $3.74 million, just before the deadline.

Unicorp and its Principle Chuck Whittall also submitted a bid of $2.35 million and Andy Adams, owner of more than 25 percent of the 237 Colony Units, bid $1 million.

Ocean Properties is based in Delray, Florida, and owns the Longboat Key Club and the former Longboat Key Hilton, as well as the Lido Holiday Inn.

Unicorp is aligned with Colony Lender and the assets Colony Lender owns including 2.3 Colony acres and the restaurant, spa and tennis court amenities, under its control.

 

Association, CORE development fail to bid

The most important part of the Chapter 7 estate is the $23 million judgment Colony Developer Murf Klauber was awarded against the Association of Unit Owners for their failure to pay assessments to repair and renovate the aging resort prior to its closing in 2010.

It was Judge Merryday who awarded Klauber and his management partnership the $23 million and rested the responsibility of the resort’s closing and subsequent damages on The Colony Association of Unit Owners.

Markedly absent from the bidding was the Association of Unit Owners and its affiliate, CORE Development. The Association had been working with CORE Development’s Manfred Welfonder, Kevin Daves and Siggy Levy in an attempt to purchase the estate from the Trustee. The Association argued in court less than a month ago that it would place a bid superior to Unicorp’s, which was the only entity to have bid on the property prior to June 17.

 

Sale halted

But the sale was halted at the very same time that Ocean Properties was submitting its bid proposal at about 4 p.m. last Wednesday. Judge Merryday heard the arguments of Colony Lender and issued an order putting a stay on the sale until the legal issues are resolved.

Judge Merryday wrote, “The Colony Lender’s appeal…presents challenging issues in a lengthy, complex litigation and will determine the disposition of assets valued at millions of dollars. This tangled and subtle controversy has appeared for review in the district court more than once in recent years…undoubtedly, additional time is necessary to studiously evaluate the merits of the pending motions and, if proper, to consider the merits of the appeal.”

Merryday goes on to say that Colony Lender presented “bona fide issues” and has “a reasonable probability of success of appeal.”

One of the main issues is Colony Lender was not being allowed by Judge May to credit bid at the sale. To that, Merryday wrote, “Colony Lender risks immediate and irreparable loss, measureable in millions of dollars if the assets at issue are sold at an auction at which Colony Lender is forbidden to exercise the statutory right to a credit bid.”

Merryday then opined that there was no compelling reason that the sale must occur on June 19, and noted that the parties have persisted through years of litigation to arrive at the present circumstance. He added that the litigation affects the occupants of Longboat Key and the government of Longboat Key and that “ensuring a carefully presented and carefully resolved controversy is easily worth a relatively modest increment of delay.”

Another significant aspect of the delay is the sale of the Chapter 7 Estate and the $23 million judgment is now being controlled by Judge Merryday. It appears Merryday will allow Colony Lender to credit bid, which means the entity will automatically enter the bidding for the Chapter 7 Estate with $3.75 million.

This was not the first time Judge Merryday has dramatically changed the course of the Colony legal action on appeal. It was Merryday who in awarding Klauber the $23 million did it by reversing Judge May who in his bankruptcy courtroom ruled in favor of the Association of Unit Owners and ejected Klauber’s management agreement.

 

Ocean Properties busy on LBK

Ocean Properties has become the largest land-use player on Longboat Key within two years. In 2012, the company bought the Longboat Key Club and is looking to resurrect the concept of a major renovation and redevelopment of its Islandside property.

Last year, Ocean Properties purchased the 33,000 square-foot Chart House Restaurant building and the three acres it sits on for $6.2 million. Although the Chart House has a 20-year lease, the Chart House will now become central to the redevelopment plans and if the lease is bought out, could be the site of a future hotel on the pass.

Ocean Properties also plans to close the 102-room Hilton property this summer, and add 85 rooms and renovate the rest of the site. The additional rooms will be the first use of the 250-unit pool of tourism density that the commission controls and voters approved about five years ago.

All of the above action and inaction contrasts with the more than 40 years The Colony operated as a top-tier international resort under the leadership of Klauber. Klauber bought the property in 1970, and built the 237-unit resort, all of its amenities and tennis facilities and sold them unit-by-unit. Klauber fashioned an agreement that allowed owners to stay in their property 30 days while his management company retained the right to rent the units out 11 months of the year. This arrangement went unchallenged and elevated the resort to the point of being named the Number 1 Tennis Resort in the U.S. from 1996-2004.

In the decade before closing in August 2010, Vice President Al Gore as well as President George W. Bush made The Colony the base for their visits to the area.

In sum, there will be an auction of all the assets; it is a question now of Judge Merryday and the district Court to set the rules for the auctioning of the $23 million judgment and other interests.

 

Tags: , , , , , , , , , , , , , , , ,

Longboat Key News

3 Responses for “Colony sale on-hold by appeal, Ocean Properties makes proposal”

  1. news says:

    It’s really a great and helpful piece of information. I’m satisfied
    that you just shared this useful info with us. Please stay us
    up to date like this. Thank you for sharing.

  2. Stadts says:

    Great more government benefits and tax considerations, just what we don’t need. BTW it’s not looking so exclusive today.

  3. Marglo says:

    Extremely smart move by Ocean Properties to control hotel rooms in Longboat Key. Let the owners of the quasi time shares pay the judgement. These folks mistreated their properties and let them suffer for their neglect. That original business plan was flawed. One should never allow that kind of power to what in reality were time share holders. The Colony is a wonderful, exclusive property that can be rebuilt with luxury rooms, an indoor and outdoor pool and at least 6–8 indoor courts. This will allow tennis during the burning hot days of summer, during thunderstorms, at night and during the cold winter months. Also by controlling so many hotels rooms Ocean Properties should be able to receive tax considerations and other government benefits because Sarasota needs those tourist dollars. The secret for making this work as a year round resort is tennis.

Leave a Reply