Punit Shah and Santosh Govindaraju finally got their day in court on Friday.
The bay area real estate investors who tried and failed to buy Channelside Bay Plaza last year — their bid blew up amid allegations of harsh language and unfair dealing — are suing to kill the deal struck by the current bidder for the downtown complex: the Tampa Port Authority.
The pair even came to federal court in Delaware with a $7 million cashier's check — guaranteed by the bank — to prove that their venture, Liberty Channelside LLC, is ready to buy the complex as soon as possible.
Or, failing that, they asked a bankruptcy judge to end the port's deal to purchase Channelside and put the complex up for auction to the highest bidder.
"What we have here is an opportunity to solve the problem with the highest, and best offer," said Liberty's attorney, John Anthony, "to maximize the value (of Channelside), which is what the bankruptcy code is all about.
"That's why we brought a certified check. Money matters."
"Who did you make the check payable to?" U.S. Bankruptcy Judge Christopher Sontchi asked. "I'm curious."
The check was made out to Kieran Wallace and Eamonn Richardson, representatives of the Irish Bank Resolution Corp., which owns the foreclosed Channelside property.
Liberty wanted to trump the port's offer for Channelside: $5.75 million.
"If the shoe were on my foot," Anthony said. "I'd rather have more money."
Attorneys for the port and the bank argued against Liberty's lawsuit in a six-hour hearing. The judge said he'll announce his ruling 4 p.m. Tuesday.
Herein lies the crux of the Channelside dispute: The port owns the land, but the bank owns the mortgage on the building. The downtown icon is in dire need of a developer with the vision and deep pockets to turn it around, but neither side can agree on that choice.
Last year, the Irish bank agreed to sell the complex to Liberty. But Liberty's talks with the port turned acrimonious. In May, the port governing board voted to kill Liberty's sale agreement.
The port then decided that the best way to solve the Channelside conundrum was to unify ownership of the property, so the port board voted in September to buy the Channelside loan.
The IBRC, though, also sought U.S. bankruptcy protection for its American assets. Thus, the port's deal to buy Channelside must be blessed by a federal judge.
But in December, Liberty sued to halt that sale. They're seeking damages from the port and still hope to somehow snag Channelside for themselves.
In court on Friday, Liberty made a new allegation: The Tampa Port Authority's enabling act — the legislation that created and governs the agency — doesn't specifically allow the port to buy the Channelside loan.
Earlier this week, Liberty's attorneys deposed Charles Klug, the port's top attorney, about whether the Tampa Port Authority could legally buy the Channelside loan.
"We're allotted to acquire any property rights," Klug said, according to the transcript.
The attorney for the IBRC, Van Durrer II, argued that Liberty's deal has come and gone. The IBRC's special liquidators did what the Irish government told them to do: get rid of the bank's distressed assets, which meant selling Channelside to the port.
Durrer said Liberty's lawsuit is really about Shah and Govindaraju's personal dispute with port officials after negotiations went awry very publicly last year.
"I don't know who's right or who's wrong and neither does the special liquidator," Durrer said. "What I know is they're not interested in spending anymore money to find out."
The attorney for the port, Jason Burnett, said the judge should approve the sale and rule on Liberty's claim for damages later. He said that Friday's testimony proved that the marriage of Liberty, the port and the Irish bank could not have been saved.
"Your honor, we think it was demonstrated that this would not be a healthy relationship in any form or fashion," he said.
And like Liberty, Burnett added, the Tampa Port Authority was just as capable of quickly buying Channelside:
"The port is ready, willing and able to pay the $5.75 million."
Jamal Thalji can be reached at (813) 226-3404, [email protected] or @jthalji on Twitter.