Courts help decide key Colony litigation in 2015

If one were to judge the progress or lack thereof at The Colony Beach and Tennis Resort by driving by the site on south Longboat Key, it would appear that nothing happened in 2015. But in fact, several key court rulings have moved the resort, which has been closed since Aug. 2010, closer to resolution.

The first half of the year was dominated through September in U.S. Bankruptcy Court, where Judge Rodney May vowed over again that an auction of a critical asset in the Chapter 7 partnership estate – a $23 million judgment against unit owners – would occur. At one point, Unicorp, Andy Adams, Ocean Properties, and others, had qualified for the auction that in the end was never held. In September of 2015, the Chapter 7 Trustee told Judge May that an agreement with the Association of Unit Owners had been reached for what he believed was the highest and best offer. Unicorp protested and argued in court, but the Judge sided with the assertion that the Association had the power to waive about $30 million in counter claims and that tilted in the owner’s favor. The rest of the offer paid $2.5 million in cash and an additional $500,000 for any other claims that may arise. In essence, when Judge May approved that agreement, it retired the largest threat and liability against the unit owners. It left in its wake, Unicorp, which its President Chuck Whittall heads up, with the assets it had bought from Colony Lender that include 2.3 acres and the recreational amenities as well as the spa and restaurant. 

Whittall and Unicorp contend in court that they own the rights to collect on the recreational lease that unit owners were bound to through their original purchase at The Colony. That matter has yet to be ruled on.

In the meantime, in Dec. 2015, Unicorp and developer Manfred Welfonder made elaborate proposals to the unit owners to redevelop the site.

Both proposals offer to rebuild the 17.2-acre site and either buy out existing owners or offer time at a redeveloped resort.

Whittall and Unicorp offered to pay owners $126,000 per unit for an outright sale of the property. Unicorp also offered a $200,000 premium for waterfront units.

If owners do not want to sell, they could receive a 30-day vacation slot which they would own as a fractional.

Welfonder has partnered with Naples-based Lutgert Companies. Welfonder’s proposal is for current owners to buy in to a redeveloped resort at a discounted price for a unit below market value. He said the units would be owned in the same way they are used to, and they could enjoy them for 30 days and a management company would rent it out for the rest of the year. His second option for owners is to convert the current ownership deed into a co-ownership deed that would be shared with other owners and could be used for 30 days. The third option, said Welfonder, is to outright sell the unit for an undisclosed price.

The board and the owners recessed after hearing the proposals and the issue will continue into 2016 and beyond.

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