Hollywood condo-hotel could be sold out of bankruptcy
Brian Randell | March 13, 2020
The developer of the Costa Hollywood Beach condo-hotel could sell the property out of a bankruptcy auction.
Costa Hollywood Property Owner LLC filed its Chapter 11 liquidation plan March 11 to establish ways to repay creditors. Attorney Peter Russin of Meland Russin & Budwick, which represents the debtor, said he hopes to hire a real estate broker and market the property for sale.
The company owns 52 unsold condo-hotel units and the common area of the hotel at 777 N.Ocean Drive. It previously sold 274 units in the building, which started closings in November 2017.
In May 2019, 777 N. Ocean Drive LLC, an affiliate of Madison Realty Capital, filed a $40.06 million foreclosure lawsuit against Costa Hollywood Property Owner and loan guarantor Moses Bensusan.
The developer filed Chapter 11 in U.S. Bankruptcy Court in Fort Lauderdale in September.
Under the proposed liquidation plan, lender 777 N. Ocean Drive LLC would be the “stalking-horse bidder” in the auction with a $43 million credit bid, meaning the bid would consist of the money it’s owed from the mortgage. Third-party bidders could exceed that amount, and the lender could raise its bid, Russin said.
If the property sells for more than the mortgage amount, the proceeds would pay the other creditors. The debtor listed about$21.7 million in additional claims.
The liquidation plan also calls for lender 777 N. Ocean Drive LLC to contribute $475,000 into a fund to pay unsecured creditors.
“This gives the estate the opportunity to sell the property for more than the lender debt,” Russin said. “And even if it does not, the creditors will get some distribution.”
The entity that buys the hotel would have the option to change its management company, he added. Evolution Hospitality is currently the manager.
The plan will require the approval of creditors and U.S. Bankruptcy Judge A. Jay Cristol. Russin would like to schedule an auction within 60 days.
The Costa Hollywood Beach Resort features a fitness center, communal courtyard, custom art pieces, and a 25,000-square-foot rooftop pool and sun deck with Atlantic Ocean and Intracoastal Waterway views.