Monday, April 23, 2018
Business

Liberty group sues Tampa port over scuttled Channelside deal

TAMPA — There's a dramatic new subplot in the Channelside Bay Plaza soap opera: The old suitor, Liberty Channelside LLC, is suing the new suitor, the Tampa Port Authority, once again clouding the future of the downtown waterfront complex.

Liberty accuses the port of sabotaging and scuttling its deal to purchase Channelside so that the Tampa Port Authority could swoop in and strike its own deal to buy it instead. The lawsuit threatens to yet again delay the port's bid to buy Channelside.

"The Port has been dishonest about it(s) intentions," Liberty attorney John Anthony wrote in a statement released Thursday.

The port authority did not return requests for comment.

The day before, Wednesday, turned out be a big step forward — and then a big step back — in the roller-coaster saga.

That's when Liberty filed the lawsuit in federal court in Delaware — on the same day a bankruptcy judge there issued a ruling that could finally get the port's stalled deal to buy Channelside from the Irish Bank Resolution Corp. moving again.

Liberty's principals, local real estate investors Santosh Govindaraju and Punit Shah, want the Tampa Port Authority to pay them actual damages, punitive damages and legal fees. But a statement from their attorney said they have not yet given up on the idea of buying the retail and entertainment complex — even though their deal with the bank expired and the port already rejected their bid.

"Liberty seeks the benefit of the bargain that it lost when the Port interfered with its efforts . . . ," read the lawsuit. "Liberty is seeking . . . to be made whole by the Port for the lost opportunity involving Channelside; however, Liberty's ultimate goal is to transform Channelside into a premier facility consistent with the plans the Port initially greeted with such enthusiasm."

The bank owns the Channelside building, but the port authority owns the land beneath it. Both sides couldn't agree on picking a new operator to turn around the nearly empty downtown icon. So in September, the port signed a deal to buy the building from the bank for $5.75 million. Once the sale is approved, the port can select its own Channelside savior.

But the same port governing board that voted to buy Channelside was also the same board that, months earlier, had voted to kill Liberty's own deal to buy it.

Liberty signed a deal to buy the Channelside building from the bank in January, then began negotiating with the port. The port's land ownership gives it final say over any deal.

Months of negotiations turned hostile in May. Negotiations stalled over millions in escrow demands. Govindaraju and Shah attended the May 21 port board meeting, apologized and pledged to get the deal done.

The board then took an unscheduled vote to kill the Liberty deal.

The lawsuit accuses port officials of encouraging Liberty to buy Channelside, then putting up barriers to the sale, killing the deal, and using Liberty's efforts to set up the port's deal.

The IBRC foreclosed on Channelside in 2010 after the former operator defaulted on a $27 million mortgage used to buy the building.

The Liberty lawsuit says the group negotiated the Irish bank down to a $5.5 million price. The port, the lawsuit contends, then used those negotiations to set its own price of $5.75 million.

It was not known how much in damages Liberty will seek, but the lawyer's statement does point to port officials valuing the complex for far more than the sale price: $18 million to $26 million.

The IBRC was also named in the lawsuit but does not comment on Channelside matters.

The main questions facing Channelside, however, are: What effect could the lawsuit have on the sale? Could it scuttle the deal? Or delay it how much longer?

The Channelside sale was held up as the IBRC sought Chapter 15 protection for its U.S. assets in federal bankruptcy court. But the judge approved that Wednesday. Creditors can now challenge the sale before it goes through, though the port insists no one has standing to do so.

Once the sale is approved by the federal judge, then it has to be approved by a Hillsborough County circuit judge as part of the port's legal settlement of its lawsuit against the bank.

The Delaware bankruptcy judge could separate the Channelside sale from Liberty's claims for damages and decide each case separately. Liberty doesn't appear to be a creditor in the bankruptcy court, so it may not have standing to challenge the sale. It's also unlikely the court would force the port and bank to revive Liberty's failed bid.

But just dealing with the lawsuit alone could likely delay the Channelside sale.

Jamal Thalji can be reached at [email protected] or (813) 226-3404. Follow him on [email protected]

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