Wednesday, June 20, 2018
Business

Irish bank wants federal bankruptcy court to enter Channelside saga

TAMPA — Believe it or not, the Channelside Bay Plaza mess just got a lot messier.

The Irish Bank Resolution Corp. wants the fate of all of its U.S. assets — including Channelside Bay Plaza — to be decided in a federal bankruptcy court in Delaware.

It's a legal maneuver that could threaten the Tampa Port Authority's interests in the struggling downtown retail center.

More immediately, it will likely delay the port's lawsuit to evict the Irish bank from Channelside. That's set to go to trial in November in Hillsborough circuit court.

By moving to have the retail center's fate decided in an out-of-state federal bankruptcy court, the IBRC would add a whole new layer of complexity to the never-ending Channelside saga. Not only would Channelside enter the federal arena, but the IBRC could even use this tactic to introduce Irish law into the case.

The bank foreclosed on the building, but the port owns the land. Both must agree on a new operator. But the two sides have never been further apart. This new litigation could delay an endgame by months or longer — and there wasn't a resolution in sight to begin with.

"It is much more complicated now," said professor Theresa Pulley Radwan of Stetson University College of Law. "Now you're dealing with the laws of multiple countries and assets located in multiple countries and trying to coordinate all that through the bankruptcy process."

The IBRC was created by the Irish government to take over its failed banks and their assets. Thanks to a defaulted $27 million loan, one of those assets is Channelside.

On Monday, the bank filed for a Chapter 15 proceeding. That allows a foreign entity undergoing a bankruptcy overseas to protect its U.S. holdings from creditors, much the same way a company here would declare bankruptcy. U.S. Bankruptcy Judge Christopher Sontchi will hear arguments Sept. 20 in Wilmington, Del.

The port sued the bank in state court to evict it from Channelside for failing to maintain a "first-class" facility. But that lawsuit is more of a tactic. The port wanted to force the IBRC to find a suitable buyer by threatening to strip away Channelside without giving the bank a dime for it. By asking a federal bankruptcy court to take over, the bank would delay the port's local lawsuit.

Bruce Markell, a former bankruptcy judge who recently joined the faculty at Florida State University College of Law, said it makes sense for the IBRC to put all of its U.S. holdings under the jurisdiction of one court. According to court records, the IBRC is facing a handful of lawsuits across the United States. All of those would halt if the court steps in.

"If you have problems in Florida and New York and anywhere else," he said, "you get them resolved in one jurisdiction."

The port can, of course, assert its rights in bankruptcy court. The port could get the federal judge to allow its local lawsuit to continue. It could also get the court to rule that the bankruptcy has nothing to do with the port's claims against the bank. But all that takes time and money.

Yet the IBRC's Chapter 15 filing also reveals that it still has every incentive to sell Channelside: The reason the bank wants bankruptcy protection in the United States is because the Irish government ordered it to liquidate its holdings — including Channelside.

The retail center's situation has never been worse. In the past 10 months two different purchase agreements have fallen apart while Channelside has lost more shops and customers.

The port and bank aren't even talking to each other right now. The bank has not responded to a June 11 letter from the port offering better cooperation.

Last week, the port's governing board voted to give chairman Stephen Swindal the power to negotiate directly with the bank, or a potential buyer, regarding Channelside. The port is also exploring whether to buy Channelside from the IBRC itself.

The IBRC also told the federal court that it was "attempting" to finalize the sale of Channelside. But it was unknown if the bank was simply stating a goal, or had actually found another buyer.

A Tampa Port Authority spokesman said Wednesday that the port will continue to prepare for the November trial.

Times researcher John Martin contributed to this report. Jamal Thalji can be reached at [email protected] or (813) 226-3404. Follow him on Twitter @jthalji.

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