Banyan Cay Resort in West Palm Beach files Chapter 11: Could a sale take place soon?
The parent company behind the construction of Banyan Cay Resort & Club in West Palm Beach filed for Chapter 11 bankruptcy reorganization last month, marking the latest twist for the still unfinished hotel in the heart of the city.
By filing Chapter 11, Banyan Cay's owner halted a foreclosure action by the project's lender, an affiliate of Calmwater Capital in California.
The Chapter 11 filing also is a way for the development to work through its debts, clearing the way for a new owner to finally complete the project, Banyan Cay lawyer Joseph Pack said.
To that end, Banyan Cay recently revealed in court documents that Westside Property Investment Company Inc. of Colorado is bidder. Westside is willing to pay $102.1 million for the development, the filing said.
Westside's bid sets the floor for a price at auction although another bidder could buy the property if the price is at least $5 million more than the Westside bid. A Westside Property executive didn't return inquiries for comment.
Banyan Cay Resort in West Palm Beach hit with $85 million foreclosure lawsuit
More: Why is Banyan Cay Resort & Club still unfinished? What to know
Prior coverage: Work stops at $100M Banyan Cay resort: A pause or a problem?
Banyan Cay is enthusiastic the proposed auction is the right move for the troubled development and could lead to the project's completion, at long last.
"The debtors believe that a prompt sale of the assets represents the best option available to maximize value for all stakeholders in the Chapter 11 cases. Time is of the essence," Banyan Cay lawyers wrote in their filing.
In is initial U.S. Bankruptcy Court filing, Banyan Cay broadly listed its assets as worth between $100,000 to $500 million, and debts in the same range.
Banyan Cay's financial woes well documented, but bidders said to be lining up
Even though an auction in bankruptcy court hasn't yet been approved, a proposed broker for the auction said he's already fielding queries from interested buyers.
"I've not sent out of one email and our phone is ringing off the hook," said Matthew Bordwin, principal and co-president of Keen-Summit Capital Partners in New York.
They like the property's rare in-town location and Jack Nicklaus-designed golf course, Bordwin said.
"Where else could you build this in West Palm Beach? You couldn't replicate it," Bordwin said of the largest redevelopment in the city since CityPlace, now known as The Square.
The proposed sale would include the hotel and golf course, as well as land for 22 resort villas, plus a separate parcel for a condominium development.
A U.S. Bankruptcy Court hearing to approve the auction is set for April 28. If approved, the bulk of the property could be sold by late June or July, Pack said.
Other parcels, including those set aside for single-family homes, could be sold in separate transactions, Pack added.
The total price for all the Banyan Cay holdings could reach $114 million, one court filing said.
A boutique hotel with an in-town address just one of Banyan Cay's features
Banyan Cay Resort was slated to be completed last fall after years of construction stoppages, a switch in hotel brands and legal woes for its developer, Domenic Gatto Jr.
The $100 million complex is just east of Interstate 95, off Congress Avenue and north of Palm Beach Lakes Boulevard, near the Palm Beach Outlets shopping mall.
The 150-room hotel and resort was expected to open as a Destination by Hyatt property, marking the first Florida location of this boutique, upscale Hyatt brand.
Want to get The Dirt?
Stay up to date on South Florida's sizzling real estate market and sign up for The Dirt weekly newsletter, delivered every Tuesday! Exclusively for Palm Beach Post subscribers.
The hotel's promised amenities include a spa, a fitness center, three swimming pools, a tiki bar, a wedding pavilion, a tennis pavilion and three restaurants. The property also has meeting space and banquet facilities.
In addition, Banyan Cay features an 18-hole, 130-acre Jack Nicklaus Signature golf course, which was completed in 2017 and is open.
The hotel's resort amenities are expected to be a perk for residents of the nearby Residences at Banyan Cay single-family home community. Residents of the Lands of the President community, which features houses and condominiums that overlook the unfinished site, also are eager to see the hotel resort completed.
Despite its promise, Banyan Cay's troubled history goes back years
The March 29 bankruptcy court filing marks the second time this property has become a financial quagmire for its owner.
The 250-acre Banyan Cay property used to be the site of the President Country Club, which fell into financial trouble a decade ago under the weight of bank debt.
The club was sold to an investor group for $11 million in 2011. That investment group, led by Hardrives construction founder George Elmore, flipped the property to Banyan Cay Dev LLC for $26 million in 2015.
At the time, Elmore said he was glad to be rid of the site. "Lots of cash calls and aggravation, and I'm glad it's gone," he said.
Under Gatto's ownership, work on Banyan Cay started, stopped, started and then stopped again. The hotel's flag started out as Noble House, a boutique brand headquartered in Washington state, then switched to Hyatt.
Just as the project was nearing completion in mid-2022, Banyan Cay slipped into a battle with its lender for control of the property.
In July, Calmwater Capital filed a foreclosure lawsuit against Banyan Cay and affiliated entities seeking repayment of $85 million in loans as well as control of the property.
In its complaint, Calmwater Capital alleged Banyan Cay missed deadlines to open the hotel by April 30, 2022.
By February, Banyan Cay had lost the lawsuit, and a Palm Beach County Circuit Court judge issued two final judgments in favor of Calmwater Capital. The judgments totaled more than $95 million, an amount that includes the loans plus interest.
The judge also ordered the property's sale at an April 3 auction.
Gatto had tried to engineer a sale of the property before the April deadline. But then a deal to sell the project to New York-based Witcoff Group died.
Banyan Cay and several affiliated companies filed for Chapter 11 bankruptcy protection on March 29.
Alexandra Clough is a business writer and columnist at the Palm Beach Post. You can reach her at aclough@pbpost.com. Twitter: @acloughpbp. Help support our journalism. Subscribe today.
This article originally appeared on Palm Beach Post: West Palm Beach Banyan Cay Resort in Chapter 11 but auction looms
