In the upcoming auction for control of Channelside Bay Plaza, Port Tampa Bay may have won a slight advantage over other bidders in the form of a key bit of secret information: The names of some rival bidders.
That nugget of intelligence was buried in hundreds of pages of proposed auction rules and criteria filed by bankruptcy lawyers who represent the Irish bank that still holds the mortgage on the shopping and restaurant complex. Ultimately, the auction could help decide the fate of Channelside, and whether the neighborhood overall prospers and becomes fertile ground for dreams of a baseball stadium or other entertainment district.
The port’s governing board earlier this week approved the submission of its own $5.75 million opening bid, and told its representatives to bid whatever it takes to win control of Channelside.
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Lawyers have scheduled a July 2 auction and are asking a court to approve a myriad of bidding rules, several of which will give each side of the bidding battles something to sweat over, according to motions filed by the Irish Bank Resolution Corp.
For instance, Port Tampa Bay has long asserted veto power over any new tenants hoping to move in. All but acknowledging that veto for now, lawyers for the Irish Bank Resolution Corp. say they will share bid information with the port to help smooth the process. That won’t include the dollar amount of preliminary bids that have come in already, and bidders could expressly tell auction managers to withhold their names, but the port may know who they’re up against and rival bidders might not.
Price alone won’t win the day, as rules for the auction follow a tradition in bankruptcy law to consider both the raw dollar amount offered for an asset, but also the “best” bid, or whether bidders have the wherewithal to close a deal and whether their plans will help the asset prosper and avoid bankruptcy again.
Also, lawyers in the case say the court in theory has the authority to award financial damages to the port relating to the overall deterioration of the property.
Yet, the proposed auction rules give the port something to sweat over, too. Auction managers also say the court has the authority to invalidate the Port’s veto power. And the court could award damages to the combination Liberty Group/Convergent Capital group of investors that tried to buy control of Channelside until the Port spurned that offer. (Though largely dismissed, that lawsuit is still progressing.)
Perhaps evening all this out, auction managers proposed the court award both sides the same amount: Zero dollars.
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For those wondering if all this legal wrangling over Channelside is worth it, auction managers addressed that question too.
If the auction process doesn’t produce a satisfactory result, they want the option to simply walk away or “abandon” any responsibility for Channelside — akin to a homeowner walking away from a mortgage on their house.
As for why the bank would walk away from Channelside, there’s one primary reason. Lawyers for the Irish bank are already trying to wind down roughly 22 billion Euro in loans and assets controlled by the bank and, compared to that, they say the amounts involved in the Channelside issue “are clearly minimal.”
Meanwhile, the property is costing $70,000 a month in costs for rent, insurance, lawyer fees and management fees, according to motions filed in court describing the bidding procedures.
A detailed inspection report on Channelside by the firm of Parsons Brinkeroff Inc. includes dozens of photos of maintenance problems with the site (already disclosed to potential bidders). Other photos show maintenance problems and debris left behind in the now-closed movie theater spaces when that operator closed in September 2012.
The report tallies approximately $6.8 million to $8.1 million in potential maintenance issues. They include a roof and air conditioning equipment that are nearing the end of their life-spans, according to the report. The problems are “not high priority repair items, though they should be addressed in time.”
After the July 2 auction, managers expect to present their results, and the court could schedule a July 15 hearing to sort through all the final issues with Channelside.