|By Jerry W. Jackson, The Orlando
Sentinel, Fla.McClatchy-Tribune Regional News
Sep. 13, 2008 - One of the largest hotel owners and oceanfront developers in east Central Florida is seeking bankruptcy-court protection from creditors, blaming the economy and legal battles for its defaulting on $400 million in debt tied to its 23 hotels and other businesses and land in Volusia County.
Orlando bankruptcy lawyer R. Scott Shuker filed the first of the Chapter 11 bankruptcy cases -- 78 in all -- on Friday in U.S. Bankruptcy Court in Jacksonville on behalf of hospitality developer and manager Bray & Gillespie Management LLC.
The two biggest of 13 secured creditors are Arbor Financial, which is owed about $95 million, and Wachovia Corp., with $76 million outstanding. The filing includes about $16.5 million in unsecured debt.
Bray & Gillespie is owned and controlled by Daytona Beach Shores business partners Charles Bray and Joseph Gillespie, former investment bankers who moved to Central Florida from Atlanta in 1998.
Bray, president of the company, and Gillespie, senior vice president, have since acquired and renovated or developed numerous hotels and vacant parcels along more than 20 miles of shoreline from Ormond Beach to Daytona Beach Shores.
Current holdings include more than six miles of ocean property, according to the bankruptcy filing. The company manages the portfolio through a subsidiary, Oceans Resorts. ( Properties operated by Oceans Resorts include: Acapulco Resort, Beachcomer Resort, Best Western la Playa Resort, Plaza Resort & Spa, the Bermuda House, Sea Side Inn, Traeasure Island Resort, Ocean Waters Spa and Club 600 North)
In a Chapter 11 filing, a company seeks court permission to continue operating while it reorganizes, in a last-ditch effort to stave off foreclosures and liquidation of property to pay creditors. At least three foreclosures had already been filed.
"We need to restructure the secured debt," Shuker said. "The idea is to continue operating." The company has 571 employees, according to the main filing, which seeks to have all of the petitions handled essentially as a single case.
The 55 individual parcels listed as assets, ranging from the 320-room Plaza Resort & Spa in Daytona Beach to income-generating property leased to restaurant operators, are worth more than the debt, Shuker said. "We think so," he said, based on tentative offers for the portfolio of as much as $800 million, made as recently as 15 months ago -- deals that could not be consummated before the economic and real-estate downturns gained momentum.
But the total value of the assets is unclear, Shuker said, because of the declining real-estate market and the hit to cash flow from the slumping economy.
In addition, he said, the business has been weakened financially by a lengthy legal battle with insurance companies over hurricane-damage claims for several Daytona-area hotels -- claims dating to the 2004 hurricane season.
One of the insurance-claim cases is set to go to trial in November, while a second is expected to be heard next year. Bray & Gillespie Management is seeking more than $30 million in those cases.
Jerry W. Jackson can be reached at email@example.com or 407-420-5721.
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