Banyan Cay Resort & Club in West Palm Beach may be bought by its lender after failed sale
The lender to the embattled and bankrupt Banyan Cay Resort & Club plans to buy the project before the end of the month after its previous suitor failed to follow through on a $102.1 million sale.
In federal court filings, lender U.S. Real Estate Credit Holdings said the Banyan Cay “saga needs to end,” and it be allowed to purchase the project with a $96.9 million credit bid slated to kick in if the previous sale went kaput.
Denver-based Westside Investment Partners was the sole bidder at a bankruptcy auction and was scheduled to close on the West Palm Beach project before July 31. Instead, it left Banyan Cay in the lurch and unable to pay its insurance, maintain the property or pay employees, according to a 130-page court filing submitted Aug. 9 by the lender.
“This is not where we wanted to be,” said attorney Brian Rich, who represented the lender Wednesday during a hearing in front of U.S. Bankruptcy Court Judge Erik P. Kimball. “Our client had hoped to be paid on July 31. Unfortunately, we are where we are today.”
More to know about Banyan Cay: Why is Banyan Cay Resort & Club still unfinished?
Banyan Cay property site of former President Country Club in West Palm
The 250-acre Banyan Cay property is just east of Interstate 95, off Congress Avenue and north of Palm Beach Lakes Boulevard.
It was previously the site of the President Country Club, but the club fell into financial trouble and was sold to an investor group for $11 million in 2011. That investor group then flipped the property to Banyan Cay Dev LLC, led by Domenic Gatto Jr., for $26 million in 2015.
Gatto objected to the lender purchasing Banyan Cay, saying in court documents that it has not proven that its price is the highest and best offer, and that other potential buyers have come forward with offers higher than the $96.9 million.
Gatto attorney George Catalenello said in court Wednesday that an offer came in last week totaling $109 million, and that the lender should not be allowed to recoup the property because the sale process has technically ended.
A new sale process would allow for the new potential buyer and the lender to bid on the property, Catalenello argued.
But Kimball called Catalenello’s arguments against the lender purchase “absurd.”
“The credit bid is a backstop to a failed sale,” Kimball said. “This is the sale process. It’s just the tail end of the sale process.”
Banyan Cay, which was slated at one time to become a Destination by Hyatt hotel, remains unfinished. The Lands of the President community overlooks Banyan Cay. In addition, residents in an adjacent new single-family community, the Residences at Banyan Cay, by SobelCo, were supposed to be able to use the hotel's club as part of the purchase of their homes.
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More: Banyan Cay Resort in West Palm Beach hit with $85 million foreclosure lawsuit
Banyan Cay Resorts & Golf filed for Chapter 11 bankruptcy protection in March following a $95.1 million foreclosure judgment.
Rich, who is representing U.S. Real Estate Credit Holdings, said it has already taken steps to shore up insurance costs and payments to employees. Taxes, permit violations and golf course repairs must also be addressed.
The 18-hole, 130-acre Jack Nicklaus Signature golf course was completed in 2017 and is a popular destination for events, including charity tournaments and qualifiers for major PGA-sanctioned tournaments.
“We want to take title and pay the expenses to preserve the collateral and move forward,” Rich said.
Palm Beach Post staff writer Alexandra Clough contributed to this report.
Kimberly Miller is a veteran journalist for The Palm Beach Post, part of the USA Today Network of Florida. She covers real estate and how growth affects South Florida's environment. Subscribe to The Dirt for a weekly real estate roundup. If you have news tips, please send them to kmiller@pbpost.com. Help support our local journalism, subscribe today.
This article originally appeared on Palm Beach Post: Banyan Cay Resort and Club in West Palm Beach may be bought by lender
