|By Josh McCann, The Island Packet, Hilton
Head Island, S.C.McClatchy-Tribune Regional News
May 12, 2010--A judge has approved a possible auction of the bankrupt Daufuskie Resort & Breathe Spa should other efforts to sell the resort fail.
Trustee Robert C. Onorato proposed an auction in March as a backup plan to other efforts to sell the resort, which once was a major employer on the island.
Onorato has been running the resort with loans to be repaid upon its sale and is now relying on "luck" and credit to keep it operating, according to an order signed Friday by bankruptcy court Judge John E. Waites.
If the resort is not sold soon, it could shut down, perhaps for good, a move Onorato said would be a "disaster" for all involved, according to the order.
"The trustee urges that the assets would suffer a significant, and potentially catastrophic, loss of value (if they shut down)," the order states. "The trustee has shown that the sale of the assets needs to occur as soon as reasonably possible to maximize their value and avoid significant loss."
It was not clear Tuesday when, or if, an auction would be held.
"The process should end shortly, and a further announcement will be forthcoming," said Tobin Spirer, trustee spokesman. He declined to provide further details.
The resort's assets could be sold either collectively or in smaller groups, according to the order.
The resort includes an inn, two golf courses, tennis courts, several restaurants, an equestrian center and entitlements to develop more than 500 commercial and residential parcels.
Onorato is pursuing a sale to Montauk Resorts, a North Carolina company that previously offered $49.5 million but has been unable to obtain financing, and other potential buyers who have indicated interest, according to the order.
In December, Waites approved Montauk's offer, the highest to emerge after Onorato had marketed the property for months. At the time, Waites said he feared that if he did not approve Montauk's offer, the resort might be sold piecemeal, with little benefit to creditors or the community.
The resort's owners, Gayle and Bill Dixon, declared bankruptcy in January 2009, listing debts of $88 million.
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