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Five Potential Buyers Expressing a Serious Interest in the Bankrupt
 Daufuskie Island Resort; Auction May be Avoided

By Josh McCann, The Island Packet, Hilton Head Island, S.C.McClatchy-Tribune Regional News

August 14, 2010 --The trustee in charge of the bankrupt Daufuskie Island Resort & Breathe Spa has won court approval to conduct an auction, although he hopes the resort can be sold without one.

A judge recently authorized trustee Robert C. Onorato to hire J.P. King Auction Co. of Gadsden, Ala., to conduct an auction, in which the resort could be sold in its entirety or in smaller pieces, according to court documents.

In a written statement, Onorato said an auction could not be held until October at the earliest and is "the least preferred outcome for Daufuskie Island, its creditors, property owners, club members and all other interested parties."

"I am still hopeful a suitable bidder can be brought to the table before then and the assets sold as a whole at a price greater than a piecemeal auction will likely bring," Onorato said.

Meanwhile, Onorato is talking with at least five other potential buyers who have expressed "a very real interest" in the resort's assets, he said.

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.

It was a major employer on the sparsely developed island, which is off the southern tip of Hilton Head Island and accessible only by boat, before owners Gayle and Bill Dixon declared bankruptcy in January 2009.

In a series of motions last week, Judge John E. Waites authorized Onorato to obtain a $250,000 loan and pay King an engagement fee of $204,766. King also would receive a 3.5 percent commission if the resort's assets sell for more than $16.5 million or a $250,000 flat fee if they sell for less.

"It is important to point out that an auction of the assets is by no means a foregone conclusion, but only that the necessary funding and ground rules have been put in place should one become necessary," Onorato wrote. "These actions were taken as a prudent measure following the inability to date to bring a qualified buyer to the table."

Montauk Resorts, a North Carolina company managed by former NFL-player-turned-developer Mike Bass, bid $49.5 million last year.

Onorato said Montauk continues to seek financing for the offer, the highest to emerge after Onorato marketed the property for months.

"Progress has been slowed by an economic environment that is one of the most difficult in recent memory and has in the process severely hampered the availability of credit," he said.

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To see more of The Island Packet, or to subscribe to the newspaper, go to http://www.islandpacket.com.

Copyright (c) 2010, The Island Packet, Hilton Head Island, S.C.

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