Fiddler’s Creek near Marco Island may soon be on the road to recovery.
The financially troubled developer – Fiddler’s Creek LLC – expects to find out today if its plan for recovery will get the nod from a bankruptcy judge. A hearing is scheduled in a Tampa courtroom, starting at 11 a.m.
More than 17 months ago, the developer filed for Chapter 11 bankruptcy protection under a mound of debt. At the time, it had $165 million in mortgage debt, in addition to owing tens of millions of dollars to bondholders who put their money in so-called “dirt bonds,” which helped the developer finance roads, utilities and other community needs as the project came out of the ground.
Fiddler’s Creek LLC is an affiliate of the Gulf Bay Group of Cos., whose founder and president is Aubrey Ferrao. Gulf Bay has built waterfront condominiums in Pelican Bay, Park Shore Beach and Marco Island. It developed the Marco Beach Ocean Resort and the Tarpon Club Yachting center, along with launching Fiddler’s Creek more than a decade ago.
Fiddler’s Creek – a luxury golf community off Collier Boulevard – is planned for 6,000 homes in about 100 neighborhoods. The projected build-out was 2020. Less than 2,000 homes have been built.
Under the reorganization plan, a new company would be formed to continue as the master developer at Fiddler’s Creek, with Ferrao as the principal shareholder. That sits well with some residents, while others hoped for a fresh start with a new developer.
“It has been 17 to 18 months of speculation and anxiety on the part of the residents as to how it was or was not going to affect their lifestyle and their community. Uncertainty is always a bad thing for anyone. I think everyone is looking forward to this coming to an end,” said Phil Brougham, a retiree who has lived in Fiddler’s Creek since 1999.
Under the reorganization plan, the developer proposes to pay off its creditors over time as the real estate market strengthens and the demand for new homes and lots improves in Collier County.
Ferrao was unavailable for comment. The developer’s attorney, Paul Battista, of Genovese Joblove Battista PA in Miami, said he would await the court’s ruling before making any comments. In court filings, the developer’s attorneys say that with “dogged determination” the developer has “overcome numerous obstacles” to put together an acceptable plan. The plan before the judge today has been revised several times from the original.
With the plan, $90 million in mortgage debt would be wiped out and the developer would get $45 million in new working capital to keep the project going.
Remaining creditors would either be paid in full or consensual settlements would be reached to cure the debt.
The developer’s major creditors are on board including Regions Bank, Fifth Third Bank, Iberia Bank, Textron Financial Corp. and Key Bank.
But not everyone supports the plan. Investors holding more than $100 million in dirt bonds aren’t happy. They didn’t have a vote on the reorganization plan because they aren’t considered official creditors of the developer. Two community development districts were set up to pay off the bondholders, so they are the creditors and they support the plan.
Under the plan, the bondholders would be last in line to get paid, said Dan Carter, president of ITG Holdings LLC in Naples, one of the investors in the bonds.
“This is going to be huge. If the plan is confirmed, it’s a huge deal because it sets a new precedent as far as bankruptcy law,” he said.
He said bondholders would not get paid for years and when they would get paid would depend on the pace of lot sales and marina and golf membership sales.
“If we go back to the good years of 2002, 2003, 2004, 2005, then yeah I think the plan could work,” Carter said. “But I’ve not heard a single real person say, ‘Hey, we are going to go back to those days.’”
Brougham, 70, is president of one of the Fiddler’s Creek community development districts. “The bondholders have had issues with the plan from the beginning,” he said. “I don’t want to comment on the legitimacy of the objections.”
He said a competing reorganization plan by another group was “in the wings, maybe a year ago,” but it was rejected and no other options came forward.
He and other residents are eager for the developer to emerge out of bankruptcy and to start a new chapter. “We’re tired of it,” he said, bluntly.
Sharon Stein, 66, a seasonal resident of Fiddler’s Creek, said despite the bankruptcy filing the community and its golf course have been kept up. “Housing prices have gone down,” she said. “But that’s true everywhere. It’s all over.”
She hopes Ferrao isn’t too ambitious with his plans to turn the community around and to pay off millions in debt over the next few years.
“I know the residents don’t really want to go through a Chapter 7,” she said. “So we’re hoping he’s going to be able to do it. The community is very split about the developer. Some would rather see someone else take it over.”
With the reorganization, she hopes to get back the initiation deposit she put down to join the community’s golf club. Like many others, she’s on a resign list, waiting for a refund.
She’s No. 17 on the resign list. With the policy requiring three or four new members to join the club before one is allowed to get out, she expects a long wait.
She said “monkeys are going to fly” when that many new people join the club.
When she joined the club years ago, she never imagined she would have to wait so long to get her deposit back. That was before the housing boom went bust.
“There was no question in my mind I was going to get it back,” she said. “They were selling homes like crazy. People were joining the club.”
Going forward, the developer has said he will not build any more homes and will only sell lots to other builders, Stein said.
“Hopefully, Collier County zoning is going to make sure everything is up to par with the rest of the community,” she said.
Despite the developer’s troubles, Stein said Fiddler’s Creek is a “wonderful place to live.”
“People love it,” she said. “It’s a great community. The residents are friendly, they are warm. There are tons of activities. Everything centers around our club and spa.”
Connect with Laura Layden at www.naplesnews.com/staff/laura_layden.