Make us your home page

Channelside auction dispute ruling coming Monday

Jeff Vinik, owner of the Tampa Bay Lightning, won the auction for Channelside, but Liberty Channelside LLC challenged that result. A judge will rule on the dispute Monday.


Jeff Vinik, owner of the Tampa Bay Lightning, won the auction for Channelside, but Liberty Channelside LLC challenged that result. A judge will rule on the dispute Monday.

Judgment day for Channelside Bay Plaza's latest would-be savior is Monday.

That's when U.S. Bankruptcy Judge Christopher Sontchi will decide whether to approve Tampa Bay Lightning owner Jeff Vinik's $7.1 million bid for Channelside.

Based on the judge's comments after Thursday's hearing, however, Vinik's bid could be in trouble. The judge didn't have any issues with Vinik or his offer, but he said he was troubled by the July 2 auction itself.

"I have some concerns about how the process was run," Sontchi said.

In fact, after two days of testimony this week, the judge seemed to have issues with all of the main players in the long-running Channelside drama.

The judge said he was concerned with: the auction set up by the liquidators of the Irish Bank Resolution Corp., which is trying to sell Channelside; the role of the Tampa Port Authority in the auction, which wants to pick Channelside's next owner; and Liberty Channelside LLC, which challenged the auction and covets Channelside but did not submit a bid.

If the judge dismisses the results of the auction and orders another one, it would be another legal win for Liberty investors Santosh Govindaraju and Punit Shah.

The port scuttled its bid for Channelside in 2013. It struck back in February when the same judge dismissed the port's own attempt to buy the outdoor mall.

But during Thursday's hearing, the court had pointed words for Liberty.

Liberty attended the July 2 auction in New York but chose not to bid. Instead, it offered $10 million for the complex afterward. That did not exactly win over the court.

"I also have concerns about the lateness of the latest Liberty bid," Sontchi said. "I have concerns that bid may be D.O.A. (dead on arrival.)"

Liberty alleged that bank liquidators and the port conspired to have Vinik win the auction. Liberty accused the port of inflating Channelside's repairs to $8.6 million to scare away potential bidders. As proof, they said 77 entities expressed interest in the auction but just three showed up: Vinik, the port and Liberty.

The port was prepared to offer as much as $15 million for Channelside but ended up bidding only $3.5 million for the loan. Vinik's winning $7.1 million bid was for the building. Liberty also complained that the port endorsed Vinik's plans for Channelside even though the port was a competitor in the auction.

Liberty attorney John Anthony said the port's actions were akin to helping a friend meet people at a bar.

"That is a wingman scenario," he said. "They are watching out for their bidder."

But the judge questioned how Liberty could complain about the auction process when it refused to bid for Channelside and compete directly against Vinik.

"I hear a lot of complaints about process," Sontchi said. "But when it comes time for the auction, you refuse to bid and you wait until the day before the hearing of the sale to produce a superior bid that you now want me to approve?

"So I want to know, was this all gamesmanship?"

Govindaraju testified that Liberty didn't bid because the auction confirmed their suspicions. If the port really wanted to buy Channelside, he said, then why didn't it bid against Vinik?

"We didn't see competitive bidding against each other," he said. "We felt at this point, the collusion was obvious to us."

Van Durrer II, attorney for the IBRC liquidators, said Liberty's behavior throughout the court case has been suspect.

"Once upon a time, Liberty was very interested in this project," he said, "and somewhere along the way, it was converted into a litigation strategy and it explains every single behavior since."

The port owns the land Channelside is on, so it has certain rights to the property and collects rent. The port's attorney, David Hendrix, denied that the port rigged the auction for Vinik.

"There is no evidence at all that there have been meetings at the start of this bid process between (Vinik's group) and representatives of the port," he said.

Liberty also pointed out that, after a 3 percent commission to the auctioneer, Vinik's bid was really $6.9 million. That's less than the $7 million Liberty offered in February.

So, with its offer of $10 million on the table, Liberty's attorney asked: Why wouldn't the bank and port want $2.9 million more for Channelside?

"A bank and a debtor that doesn't want more money?" Anthony said. "I've never heard anything like that in my life."

But the judge seemed to rule out taking Liberty's offer or handing Channelside over to anyone without the assent of the complex's owner, the IBRC.

"Whatever we do," the judge said, "I'm not going to award you the asset right now."

Then Sontchi mulled how he might restart the Channelside auction process.

"I may reopen the auction," he said. "I may require different procedures. I may have you auction it off in front of me."

"You have a wide amount of discretion to do the right thing," Anthony said.

The judge is scheduled to issue his ruling at 12:30 p.m. Monday.

Contact Jamal Thalji at or (813) 226-3404. Follow @jthalji.

Channelside auction dispute ruling coming Monday 07/17/14 [Last modified: Thursday, July 17, 2014 10:31pm]
Photo reprints | Article reprints

© 2016 Tampa Bay Times


Join the discussion: Click to view comments, add yours