|By Josh McCann, The Island Packet, Hilton
Head Island, S.C.McClatchy-Tribune Regional News
October 22, 2010 --The future of the bankrupt Daufuskie Island Resort and Breathe Spa remains unknown after no one bid on the property, despite a standing-room-only crowd at an auction Thursday.
Twelve potential bidders had pre-registered for the auction, but none presented the $1 million cashier's check necessary to participate, said trustee Robert C. Onorato, who is overseeing the bankruptcy.
The minimum allowable bid was $16.5 million.
"At this point, we have no bidders," Craig King, president of J.P. King Auction Co. of Gadsden, Ala., told the crowd gathered in a ballroom at the Westin Resort and Spa on Hilton Head Island.
Auction organizers considered breaking the assets into groups and allowing secured creditors to claim them, but decided to wait for an already scheduled hearing Monday before Judge John E. Waites.
One issue is whether previous owner Bill Dixon, who declared bankruptcy in January 2009, would be allowed to bid on properties as a creditor, said Rick Mendoza, an attorney representing Onorato.
"It's better we discuss (the issues) and resolve them in the judge's presence," Mendoza said.
If the judge allows creditors to claim most of the resort except for two properties -- the marina at Melrose Landing and Bloody Point golf course -- Onorato expects he can retrieve some money for unsecured creditors by selling the remainder later.
Onorato called the two assets "the keys to the kingdom."
However, Mendoza said there will not likely be much money left for unsecured creditors after expenses.
Court documents state J.P. King will receive about $450,000 for conducting the auction, which included glossy marketing materials and live music.
The resort includes another golf course, an inn, tennis courts, several restaurants, an equestrian center and entitlements to develop more than 500 commercial and residential parcels. It was once a major employer on the sparsely developed island, which is off the southern tip of Hilton Head and accessible only by boat.
Even though Thursday's auction drew no bidders, Mendoza said he and Onorato think people remain "very interested" in the assets. Some interested parties may be waiting to deal directly with the properties' next owners, Mendoza said.
Thursday's aborted auction indicates how difficult it is to sell property of that type in the current economic climate, in which finding financing for high-dollar deals is difficult.
"It's a sign of the times," Onorato said.
Montauk Resorts, a North Carolina company managed by former NFL player and developer Mike Bass, offered $49.5 million for the property last year but financing never materialized.
Some people left the auction frustrated.
Gary Johnson of Boardwalk Properties, who has bought and sold property on Daufuskie for more than 20 years, said he was disappointed not to get the opportunity to bid on the landing individually.
"Maybe they missed an opportunity to find out who's interested in some of the components separately," he said.
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Copyright (c) 2010, The Island Packet, Hilton Head Island, S.C.
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