Developer of Naples Bay Resort faces bankruptcy

To keep the Naples Bay Resort open, the developer may go bankrupt

— The developer of the Naples Bay Resort may be forced into bankruptcy.

On Wednesday, creditors filed an involuntary petition for Chapter 7 bankruptcy against the developer, Basil Street Partners, in federal court in Fort Myers. The filing comes as a court-appointed receiver for the project is searching for new financing to keep the resort operating.

An emergency hearing on the bankruptcy petition was held at 3:30 p.m. Thursday. The hearing went on for more than three hours, as the attorneys on both sides tried to strike a compromise.

A ruling has yet to be made on whether the bankruptcy will proceed.

Well-known developer Jack Antaramian, a partner in Basil Street Partners, is one of the creditors filing the bankruptcy petition. He had no comment.

In court, Antaramian's attorney, Daniel DeMarco, argued the bankruptcy filing was necessary for new financing to keep the resort, near Tin City in downtown Naples, open. He said a Texas-based investor, EFO Financial Group, was willing to loan nearly $3.8 million to help fund operations and other expenses, but the offer came with conditions, including having the protections that come only with bankruptcy.

"We have to start some place and we have to move expeditiously," DeMarco said.

By providing financing in bankruptcy, EFO would be first in line to get paid back, getting ahead of other creditors. A trustee working for the bankruptcy court would arrange the financing, instead of the court-appointed receiver.

After much debate and hearing from both sides, U.S. District Court Judge Jeffery Hopkins, agreed to have a trustee appointed through the bankruptcy court, but with limited powers. The receiver, Gerard McHale, a forensic accountant based in Fort Myers, will continue to operate the resort.

The bankruptcy petition seemed to take Antaramian's other partners in Basil Street by surprise. His other partners, who are not part of the petition, are Fred Pezeshkan, president and CEO of Manhattan Construction (Florida), a general contractor in Naples, and foreign investors Iraj Zand and Raymond Sehayek.

Alan Perlman, the attorney representing Basil Street's other partners, questioned the need for the bankruptcy filing and the motives behind it.

"It's just insane," he said. "What's the real purpose?"

He pointed out that the receiver had been operating the resort for a year and had found other financing to cover budget shortfalls without the need for a bankruptcy filing.

"There is a receiver in place," Perlman said. "There is no emergency."

He said he knew of no other cases like this one, where there was both a receiver and a trustee to oversee the same project.

McHale cannot be the trustee because he's owed money as the receiver in state court.

Perlman said the filing could hurt his clients, taking away their right to have a seat at the table if there are negotiations to sell the property in the future.

DeMarco repeatedly told the judge that without a trustee there would be no financing to keep the resort open.

"We're history," he said.

At one point, DeMarco got so upset at Perlman's objections that he raised his voice angrily, asking him "Are you funding this?"

The other creditors behind the petition are Young Van Assenderp PA, Turrell, Hall & Associates Inc. and Forge Engineering Inc. The claim amounts in the filing exceed $96,000.

Young, Turrell and Forge have liens on the mortgaged property.

Antaramian has taken over the mortgage on the resort property and is foreclosing.

The judge warned that if it's ultimately ruled that the bankruptcy petition was made "in bad faith," Antaramian and the other creditors would be forced to pay the other side's attorneys fees, along with hefty damages.

According to the bankruptcy filing, the receiver has considered selling the resort, but continuing losses have prevented that from happening.

Though business at the resort is improving, the resort is still not able to generate enough income to cover all of the receiver's expenses.

So far, Antaramian has covered the shortfalls, totaling $1.2 million. He doesn't want to do it anymore.

In the next few months, expenses include $450,000 in property taxes, $170,000 for insurance and $400,000 in association dues for condominium and hotel units that remain unsold.

Steven Wilkes, a representative for the Office of the United States Trustee, which oversees the bankruptcy process, told judge Hopkins that the request to have a receiver and a trustee was unusual. He questioned whether a trustee would even step forward and want the job because with such limited duties the pay would be so low.

EFO is a private family business based out of Dallas, Texas. It has a satellite office in Naples and provided $26 million in financing to help turn around the high-end Aqua condominium development off Wiggins Pass Road in North Naples after its developer filed for bankruptcy protection to reorganize in 2008.

Renzo Renzi, a financial analyst with EFO, said the company wants to do the financing under the protection of the bankruptcy code, with direct access to collateral and a clean exit strategy.Now, he said, it will be up to the trustee to decide whether to approve the company's offer of financing.

He said EFO is self-funded, with a large family behind it. "We're not brokers," Renzi said. "We're a direct source of capital."

Connect with Laura Layden at www.naplesnews.com/staff/laura_layden.

© 2011 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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