UPDATE: Banyan Cay sale fails, future of West Palm Beach resort unclear
EDITOR'S NOTE: This story has been updated with new information about the status of the buyer deposit.
The proposed sale of the unfinished Banyan Cay Resort & Club in West Palm Beach is a bust.
Westside Property Investment Company of Denver did not buy the resort for $102.1 million as part of Banyan Cay's Chapter 11 bankruptcy reorganization. The deadline to complete the sale was July 31.
Hours before a key hearing on July 25, Westside notified the debtors it was not moving forward with closing on the purchase of the resort, once slated to be a Destination by Hyatt hotel.
Otis Moore, a principal with Westside, could not be reached for comment by Tuesday evening.
But in a June interview, Moore gushed about Banyan Cay and his company's big plans for the resort.
Moore said Westside planned to position Banyan Cay as both a luxury enclave and a rare private golf club in the heart of a city bursting with new investment, companies and residents. "This will be an elevated product than what it was originally imagined as," Moore said.
Moore said Westside planned to spend $5 million to complete the hotel in time for a Dec. 1 opening.
But the property remains unfinished. And it's unclear what this latest setback could mean for the troubled West Palm Beach hotel and club, especially for nearby residents.
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.
Joseph Pack, the attorney representing Banyan Cay in its Chapter 11 filing, could not be reached for comment.
Banyan Cay project: A prime West Palm Beach location with a troubled history
Banyan Cay filed for Chapter 11 bankruptcy reorganization in March, marking the latest twist for the still unfinished hotel, which has been under construction, on and off, for years.
The 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 250-acre Banyan Cay property used to be the site of the President Country Club, which 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.
An 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.
But the project's centerpiece, the resort hotel, remains only partly built, even though it was supposed to open in 2018 as a lushly landscaped enclave featuring a fitness center, a pool, cabanas, a tennis center, and a tiki hut and spa, plus meeting space.
Construction starts and stops delayed the hotel's completion for four years, but by 2022, the end was in sight. Banyan Cay was set to open last fall as a Destination by Hyatt property, the first Florida location of this boutique, upscale Hyatt brand.
More: Banyan Cay: Buyer plans to finish resort by December in bid to "elevate" West Palm complex
But then Banyan Cay's main lender, Calmwater Capital, filed a foreclosure action in mid-2022. Construction halted.
By February, Calmwater Capital, had won a judgment.
Banyan Cay's lawyer then filed Chapter 11 bankruptcy reorganization to halt the foreclosure and continue efforts to sell the resort.
More: Why is Banyan Cay Resort & Club still unfinished? What to know
Anyone want to buy a hotel? Collapse of deal puts Banyan Cay completion in limbo, again.
Westside was the only entity to submit a bid in the Chapter 11 filing.
In June, Westside won approval from a federal bankruptcy judge with its $102.1 million bid, with a sale expected to close by July 31.
Pack, Banyan Cay's lawyer, said in June that rising interest rates made the cost of financing too expensive for other potential bidders.
The failed purchase of Banyan Cay spurred some last minute confusion by both the debtor, Banyan Cay, and the lender, Calmwater Capital.
The day before the July 31 closing date, Banyan Cay's owner said in a court filing that it was is trying to locate a $3 million deposit that Westside said it paid in April to a title company as part of Westside's purchase agreement.
The filing said Westside wouldn't provide any documents showing it ever paid the money. In the filing, Banyan Cay said it believes Westside has engaged in fraud.
However, on August 1, Jerry McHale, Banyan Cay's restructuring officer, said the $3 million is not missing after all.
McHale said there was a mix-up over the money, which was forwarded to Banyan Cay's lender by the title company as part of a prior agreement.
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: Sale of West Palm Beach Banyan Cay Resort & Club falls apart
