Bankrupt Fla. marina goes to chief creditor - Trade Only Today

Bankrupt Fla. marina goes to chief creditor

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New River property ends up in foreclosure after Fort Lauderdale auction results voided

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When the auction hammer came down, confirming Allied Richard Bertram Marine Group’s July 17 purchase of bankrupt New River Marina for $13.4 million, everyone thought the deal was in the bag. But what looked like a sure thing turned into a nightmare for everyone involved, as the botched auction’s results were nullified July 21 in U.S. Bankruptcy Court, Southern District of Florida, because of an objection to procedure during the auction.

The court said that if another buyer did not appear by Aug. 15, the Fort Lauderdale marina would become the property of Alex Nichols, principal of 84 Marina LLC and the primary secured creditor. Nichols is owed $13.3 million by the defunct marina.

No buyer emerged, and on Aug. 15 the court declared Nichols the owner.

Nichols and other unsecured creditors had pushed for the bankruptcy auction when the marina’s owners, Mary and Bob Wickman, became delinquent in repaying investors.

Nichols said is not interested in owning the property long term; he just wanted to recoup his investment. He previously owned Crow’s Nest Marina in Oceanside, N.Y., but he is now retired and said he does not want the hassle.

“I just want to get what is owed to me, as a businessman who made a loan in the proper way,” Nichols said prior to the Aug. 15 decision. “A bank would have thrown in the towel a year ago, but I am not a bank and cannot afford to write things off. There is no monetary benefit to me other than to get what is owed me. I am fighting this and want the court system to be fair to everyone. This could happen to someone else (not being paid for a loan made in good faith) and I do not want this to happen to someone else six months from now. This is a feast for lawyers and by the time it is done, there may be nothing left for the unsecured creditors.”

More than 130 creditors hold $6,508,453 in unsecured non-priority claims. These include attorneys, investors, vendors, workers’ compensation notes, and state and federal taxes. Broward County Revenue Collection holds an unsecured priority claim for $55,350. Secured claims of $11,123,076 are due to 84 Marina LLC, first mortgage holder, and Wachovia Bank for an equipment loan for the yard’s 60-ton marine travel lift.

The marina, which is valued at $21 million per a 2006 appraisal by Roe Minor Realty Consultants, declared bankruptcy last year with $19 million in debt.

“This is a horrible situation,” said Mary Wickman, co-owner of the marina. “We are a victim of the times and the economy stinks everywhere.”

The 4.65-acre parcel is located on the south fork of New River with a controllable depth of 10 to 12 feet. New River Marina holds vessels up to 112 feet with 700 feet of water dockage and land storage for 50 to 60 boats.

Previous annual income from the marina was $3,245,329 for 2005, $3,500,000 for 2006, and $714,000 for the first quarter of 2007. Incremental lease income could evolve by constructing two new covered sheds, according to the listing agent. The covered shed generates $15,000 in revenue per month.

Dredging the slips over the submerged land-lease section to house vessels up to 55 feet could create additional slip lease revenue.

Judge John K. Olson, who nullified the July 17 auction four days later, said the auction was “clearly a disaster.” The confusion at the auction erupted over a new, unqualified bidder who behaved erratically during the auction and was vetted as a bidder at about an hour prior to the scheduled auction, which was contrary to the auction rules.

“Frankly, we were stunned with what happened [at the July 17 auction],” said Mindy A. Mora, attorney with Bilzin, Sumberg, Baena, Price and Axlerod, LLP. Mora is counsel for the official committee of unsecured creditors.

“The new bidder had a boat at the (New River) property,” Mora said. This “unwitting bidder” or “backup bidder” had a mechanic’s lien against his boat and thought he was bidding on an auction for his boat. Instead, he wound up participating in an auction for the bankrupt marina and was upset and outspoken afterwards, according to all attorneys at the hearing. The marina argued that the unwitting bidder was the sole cause of the auction irregularities.

“At the end of the auction, the bidder had manic behavior,” Mora said. “In my 26 years of practice I have never seen anything like this before.”

Thomas M. Messana, of Messana, Weinstein & Stern, P.A., representing Marina 84 LLC, stated in his motion for a settlement that a potential bankruptcy crime may have been perpetrated with the sale of the marina at auction.

“At the start of and throughout the attempted auction, the identity and number of qualified bidders or the current highest bidder was not announced,” Messana said. “One bidder was not a bonafide bidder, was not qualified and appears to have been utilized as a mechanism to increase the bidding without any intention to close upon the bid. It appears that this bidder was not even aware of the position he had unwittingly taken or been placed. [He]claims to not have intended to submit any bid at all … We want to know why the name of the [new] bidder was not announced and why it was late.”

“We had a bidder qualified who should have never been qualified,” said attorney Michael Goldberg of Akerman Senterfitt, counsel for Transworld Marine (Allied Richard Bertram Marine Group, aka ARBMG). “He did not hand in a financial affidavit and had no cashier’s check until 1:45 p.m. (to enter the auction).”

In their emergency motion for adjournment of the sale, Berger Singerman, P.A., attorneys for New River Marina, said the unwitting bidder began to “act erratically” during the bidding process and “his conduct only worsened at the conclusion of the auction. [He] refused designation as the backup bidder and demanded the immediate refund of his deposit, claiming he had not bid for the debtor’s property … and to be released of the obligation to close.”

All bidders’ deposits of $250,000 were refunded, a result of the auction, which was videotaped. While attorneys for Auction Co. of America objected to playing videos of the auction on the grounds of its “authenticity and for the purpose of throwing someone under the bus,” the U.S. Attorney’s office is not waiting to examine them and is investigating a potential bankruptcy crime.

At the July 21 hearing, Heidi A. Feinman, trial attorney for the U.S. Trustees Office, said she was obligated to bring any information to the U.S. attorney that might indicate a criminal action occurred in a bankruptcy case. This would include any written statements, copies of documents, sound bites or other recordings. Pursuant to 28 USC §586(a)(3)(F), Feinman is not required to wait for the court to make a factual finding that a crime has or has not occurred.

In an e-mail obtained July 24 by Soundings Trade Only, Feinman said, “It is clear from yesterday’s hearing that something unusual occurred at last week’s auction in this case. In order to completely understand what happened, I ask that each of you provide me with any information you may have regarding the auction. This would include any written statements, copies of documents, sound bites or other recordings. I would appreciate receiving them in the next 10 days.”

Goldberg indicated he did not believe the attorneys for the marina or the unsecured creditors committee was involved in anything criminal. Judge Olson agreed. “The principals of the debtor (Mary and Bob Wickman of New River Marina) are not responsible for this problem … no one is pointing fingers at impropriety by the debtor or the committee.”

Arthur Spector of Berger Singerman said a “second try at an auction is not good.

“We’d be happy to discuss (the offer to purchase the marina) with Mr. Goldberg’s client (Transworld/Allied). We know he wants to buy it. Granted, we know the number.”
Goldberg said his client was now compromised because it is now public knowledge that his bid for the property was $13.4 million.

“My client does not know if he would bid in another auction,” Goldberg said.

According to Nichols, Allied Richard Bertram Marine Group has not made an offer for New River Marina since the auction.

In the meantime, Ferretti SpA, parent company of Italy’s Ferretti Group, signed a contract to acquire ARBMG, a large privately held yacht retailer in the U.S., offering brokerage vessels and new yachts, including Tiara, Azimut, Maritimo and Bertram.

ARBMG was formed in 2002 by the merger of Richard Bertram Yachts and The Allied Marine Group. They hold 14 sales and service centers from the Florida Keys to Jacksonville. Its service headquarters is in the heart of downtown Fort Lauderdale on SW 2nd Street, on the south side of the New River across from the landmark riverwalk and several luxury condominiums.

The New River Marina location may have been an alternative site for their highly valued, leased service center located in Fort Lauderdale.

This article originally appeared in the September 2008 issue.

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