GSR seeks auction sale - again
Following a failed effort to market its Island properties through a local real estate company, bankrupt GSR Development LLC is now seeking court approval to sell its extensive real estate holdings through public auctions. The company had previously proposed such a sale through the international auction firm of GoIndustry Michael Fox, but withdrew the proposal on March 2 in hopes the real estate marketing effort would produce sales.
But according to the Manatee County multiple listing service records, none of the 11 properties had been sold by March 16.
Now, GSR is back in federal bankruptcy court with the same auction proposal that this time includes GSR's Villa Rosa property in Anna Maria and its Rosa del Mar property on Gulf Drive in Bradenton Beach.
To sweeten the deal for federal bankruptcy Judge K. Rodney May, GSR has also included a new compromise to its controversy with Bon Eau Enterprises LLC of Sarasota, the company that may or may not own Villa Rosa.
Bon Eau has agreed that it will guarantee "no less than $600,000 in cash" to the GSR estate if the court approves the "waterfall sale arrangement."
The GSR unsecured creditors committee has claimed that the August 2005 financial transaction between Bon Eau and GSR was a "criminally usurious" loan of $6.2 million, while Bon Eau alleges it is now the rightful owner of the 14 lots that comprise Villa Rosa, exclusive of the model home property. The unsecured creditors committee has claimed Bon Eau is not entitled to any of the proceeds of a Villa Rosa sale and any such money should be distributed to the secured and unsecured creditors.
GSR attorney Stephen Leslie argued to the court that emergency approval of the motion was needed to take advantage of the "prime season" for real estate sales on Anna Maria Island.
While Leslie's motion established no minimum bid on any of GSR's properties, the properties previously marketed unsuccessfully for GSR that would be auctioned by Fox, along with the prior asking prices, are:
- 401 S. Bay Blvd., Anna Maria, $625,000.
- 506 Bay Drive S., Bradenton Beach, $895,000.
- 109 Fifth St. S., A, Bradenton Beach, $825,000.
- 109 Fifth St. S., B, Bradenton Beach, $825,000.
- Seventh Street, Gardenia A, Bradenton Beach, $925,000.
- Seventh Street, Gardenia B, Bradenton Beach, $895,000.
- Seventh Street, Gardenia C and D, Bradenton Beach, no minimums provided.
- 615 Key Royale Drive, Holmes Beach, $1.5 million.
While no minimum bids were established for any of the individual lots at Villa Rosa or Rosa del Mar, Fox had previously set a minimum price of $10 million for all of the Rosa del Mar property in Bradenton Beach and $9.5 million for Villa Rosa in its entirety.
In somewhat of an irony, $9.5 million is reportedly the sale price that GSR principals Robert Byrne and Steve Noriega rejected last September when Gaspar Properties Inc. of Tampa attempted to purchase Villa Rosa. Gaspar had originally been interested at $11.5 million, but subsequently lowered its offer after re-appraising the property and the Island real estate market.
Several unsecured creditors of GSR, including Paul Gallizzi of Spectrum Management Inc., said it's possible that Gaspar Properties might still be interested in Villa Rosa.
At this point in the bankruptcy proceedings, however, Galizzi said he would be "very happy" to get any significant amount in a liquidation of GSR's properties, considering that most of them are mortgaged at or near maximum value. Spectrum has unsecured claims against GSR totaling more than $1.4 million.
Because of the high loan-to-value ratio on most, if not all, of GSR's properties, it's going to be difficult to sell the properties because the prices can't be lowered much if the banks are to be paid in full, Galizzi indicated. And if the properties are sold for less than the mortgages, GSR's unsecured creditors may be out of luck.
Unsecured creditor Kent Davis has already stated that he has "little faith" in the bankruptcy proceedings to return him any of the remaining money he's owed. He's already been paid $480,000 of his $600,000 judgment against Byrne and Noriega through acquisition of some of Byrne's properties in Palm Beach County. Davis said he will rely on the personal guarantee of Byrne for the repayment of the final $120,000.
Both Davis and Galizzi agreed with an assessment in bankruptcy court by unsecured creditors committee attorney John Anthony that GSR's administrative costs are eating up any money the company has, including any profits from the sale of its properties.
The total amount of unsecured claims against the GSR estate is $6.1 million, while GSR's total bankruptcy is currently at $46 million, according to court documents.