Wednesday, April 18, 2018
Business

Judge scuttles Channelside deal

TAMPA — The Tampa Port Authority's dream deal to buy Channelside Bay Plaza turned into a legal nightmare Tuesday.

U.S. Bankruptcy Judge Christopher Sontchi killed the port's agreement to purchase the most tormented piece of real estate in Tampa Bay for $5.75 million from the Irish bank that owns the mortgage on the foreclosed — and these days, seemingly accursed — outdoor mall.

The Irish Bank Resolution Corp. owns the mortgage on the building, but the port owns the land. For years neither could agree on who should buy Channelside. In September, the port decided to end the impasse by buying out the bank.

The port's deal was the only hope in the last year of resolving the complicated Channelside ownership structure that has sent businesses fleeing and kept customers away.

But by the time the port signed the deal, the special liquidators charged by the Irish government with selling off the IBRC's distressed assets had already sought bankruptcy protection for its American properties, and that includes Channelside.

Thus, the port's deal needed the blessing of a federal judge — which it did not get Tuesday.

Instead, the judge told the liquidators to get more money for Channelside than the $5.75 million offered by the port. His message, in short: Do better.

"I don't think the . . . representatives have done enough to market this aggressively," he said.

It just so happens that the judge recently met two bay area real estate investors who say they're ready to pay more for Channelside right now: Punit Shah and Santosh Govindaraju showed up at the judge's Delaware courtroom on Friday with a guaranteed check for $7 million.

That was what they agreed to pay to the Irish bank for Channelside last year. But their negotiations with the port fell apart as both sides traded accusations of harsh language, threats and negotiating in bad faith. So in May the port's governing board voted to kill Liberty's bid.

Then in December, Liberty sued in federal court to stop the port's purchase. They believe the port unfairly ended their deal so that the port could strike its own deal using Liberty's price.

Liberty also wanted Channelside put up for auction and monetary damages from the port. Those claims weren't settled Tuesday, but the investors celebrated one victory in particular: The judge determined that the Tampa Port Authority did treat them unfairly.

Back in May, while the Liberty deal was falling apart, the political website saintpetersblog.com quoted an anonymous source saying Govindaraju "accused (the port) of over-reaching and said that if they were in his country, they would cut off the liar's hands for such an offense."

Govindaraju apologized for dropping "f-bombs" during negotiations. But he insisted he was making a metaphor about overreaching in business, not threatening port officials.

He also testified last week that the way the remarks were phrased made them seem like a "cultural and religious" slur.

Govindaraju, who practices Hinduism, grew up in Carrollwood and graduated from Gaither High School and the University of Pennsylvania. He became a trader on Wall Street, then left to become the CEO of Convergent Capital Partners LLC of Tampa. He and Shah testified last week that those online remarks damaged their reputations and follow them to this day.

"In my experience this was Mickey Mouse stuff," Sontchi said of the remarks anonymously attributed to Govindaraju. The judge added: "Failure to consent (to the sale), at least based on some sort of ethnic or religious prejudice, is not in good faith."

The port's attorney, Jason Burnett, told the judge that ethnicity and faith had nothing to do with the port's decision to deny Liberty's attempt to buy Channelside.

"In no way were any religious or ethnic factors considered," Burnett said. "There were other economic factors. . . ."

But the judge didn't buy those economic factors, either.

"Based on the reasonable business standard . . . there was no legitimate business reason for the port not to consent to (the Liberty sale)," the judge said. "The allegations of foul language, etc., during the negotiations are not sufficient, in my mind, to withhold consent."

Shah and Govindaraju pumped their fists during the judge's conference call in the 28th floor offices of their attorneys. Then the lead lawyer, John Anthony, broke out bottles of champagne and handed out inscribed Montblanc pens.

"We appreciate the opportunity to share the truth," Shah said, "and to have it count as the truth in a court of law."

The problem with the ruling, however, is that it did nothing to resolve Channelside's fate, or give hope to the last remaining businesses hanging on there that it will be resolved anytime soon.

The judge chose not to rule on whether the port can cancel any deal the bank inks to sell Channelside. Thus the impasse that has divided the port and bank for years — the "original sin" of Channelside's woes — remains unsettled in a court of law.

So what happens next? Will the bank find a new buyer, a better offer, or both? Will the port offer to pay more for Channelside? Both sides could appeal the judge's ruling, but that would be a difficult path.

Instead, the bank and port could try to work out another Channelside deal — for the kind of money, perhaps, closer to the $7 million Liberty would have paid — that will satisfy the judge.

The IBRC does not comment on Channelside matters, and Tampa Port Authority officials did not return calls for comment on Tuesday. But the port did release this statement:

"The Bankruptcy Court in Delaware ruled today that the IBRC must engage in additional due diligence to move forward in regard to the settlement of the Channelside Bay Plaza. The Tampa Port Authority looks forward to continue to work with the special liquidators for the IBRC and the courts to find the best solution for Channelside and the Tampa Bay community."

There is, however, at least one buyer out there who still wants Channelside: Liberty's investors.

"We still want to buy it," Shah said.

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

Comments
Downtown’s success creates noisy problem for St. Petersburg

Downtown’s success creates noisy problem for St. Petersburg

Times Staff Writer ST. PETERSBURG — Downtown’s rapid growth has not been without tension between its residents and the businesses and events that draw exuberant crowds. The city, which has been attempting to amend its noise ordinance o...
Updated: 11 minutes ago
Everybody loses in a trade war, Canadian chamber CEO warns Tampa officials

Everybody loses in a trade war, Canadian chamber CEO warns Tampa officials

TAMPA — President Donald Trump has tweeted "trade wars are good, and easy to win."Don’t believe it, the president of the Canadian Chamber of Commerce told Tampa business and political leaders on Wednesday."We share more with you than with anybody els...
Updated: 11 hours ago
Trademark makes it official: Call it the St. Pete Pier

Trademark makes it official: Call it the St. Pete Pier

ST. PETERSBURG — Today the City Council is set to approve a $15 million construction contract and additional money for the next phase of the new Pier District expected to open in the fall of 2019.But even as council members get ready to commit hundre...
Published: 04/19/18
Tampa’s 60-year-old Housewife Bake Shop may not be closing after all

Tampa’s 60-year-old Housewife Bake Shop may not be closing after all

For nearly 60 years it was breads, cakes and pastries, up before dawn for the Perrone family in Armenia Garden Estates. For a minute it looked like Tampa’s Housewife Bake Shop was going to close, but third-generation owner Tena Perrone said on Wednes...
Updated: 1 hour ago
Fed survey finds worries about higher tariffs

Fed survey finds worries about higher tariffs

Associated PressWASHINGTON — The Federal Reserve’s latest national survey has found that U.S. businesses are growing increasingly concerned about the impact higher tariffs could have on their companies and the overall economy. The Fed reported Wednes...
Published: 04/18/18
Most of Tampa Bay’s new liquor licenses won by applicants from South Florida, Tallahassee

Most of Tampa Bay’s new liquor licenses won by applicants from South Florida, Tallahassee

TALLAHASSEE — The newest batch of quota liquor licenses for the Tampa Bay area will go to applicants from South Florida and Tallahassee. In its annual drawing, the state Department of Alcoholic Beverages and Tobacco selected the winners of 51 licen...
Published: 04/18/18
Report: Unemployment assistance in Florida lagged after Hurricane Irma

Report: Unemployment assistance in Florida lagged after Hurricane Irma

Note: This story has been updated with a response from the Florida Department of Economic Opportunity.In the days and weeks following Hurricane Irma, Gov. Rick Scott touted his administration’s preparation and response to one of the worst storms to h...
Published: 04/18/18
Florida Hospital Carrollwood spending $17.5 million to expand emergency department

Florida Hospital Carrollwood spending $17.5 million to expand emergency department

Florida Hospital Carrollwood is expanding its emergency department. The hospital, 7171 North Dale Mabry Highway in Tampa, is spending $17.5 million to add 15 new private treatment rooms, new pediatric rooms and waiting areas, and new technology, acco...
Published: 04/18/18
Dick’s destroying all the guns it pulled from its shelves

Dick’s destroying all the guns it pulled from its shelves

PITTSBURGH — Dick’s Sporting Goods is destroying all the guns and accessories that it stopped selling earlier this year after the school shooting in Parkland, Florida.The retailer said Tuesday that it is in the process of destroying all the firearms ...
Published: 04/18/18
Amazon partners with Best Buy on smart TVs

Amazon partners with Best Buy on smart TVs

Associated PressNEW YORK — Amazon has cut a deal to sell voice-controlled TVs at Best Buy, the latest attempt by the online retailer to get its burgeoning suite of tech products out where people can see and touch them. Best Buy already sells the Amaz...
Published: 04/18/18