TAMPA — Punit Shah and Santosh Govindaraju still want to buy Channelside Bay Plaza — and they're ready to buy it right now.
The Liberty Channelside LLC investors have drawn up a $7 million cashier's check that their lawyer is ready to deliver to a federal judge in Delaware as soon as today to buy Channelside. That form of payment is guaranteed by the bank.
It's part theatrics, part legal strategy. Liberty wants to disrupt the Tampa Port Authority's deal to buy Channelside for $5.75 million from the Irish bank that foreclosed on it. By ending the port's deal, Liberty hopes to resurrect its old offer to buy the long-suffering outdoor mall.
"We are standing ready as a better alternative than what the port has offered," said Tampa lawyer John Anthony, who represents Liberty. "I have no idea why anyone would want to do a deal for less money than what we're offering."
The Tampa Port Authority did not return a request for comment Thursday.
Shah and Govindaraju formed Liberty last year to purchase Channelside. They specialize in paying cash for distressed properties and turning them around.
That's what they're doing to the old Mercantile Bank building. They've invested $14 million into turning it into a high-end boutique hotel, Aloft Tampa Downtown, set to open this year. They also proposed building a hotel in northern Ybor City.
Liberty entered into an agreement with the Irish Bank Resolution Corp. early last year to buy the Channelside building for $7 million. Liberty also needed the port's approval, as it owns the land beneath Channelside. The port says it can veto any deal for the complex.
But negotiations with the port turned acrimonious. In May, the Tampa Port Authority's governing board voted to end Liberty's deal with the bank.
The port and bank were once again at odds over the choice of a developer to fix Channelside. The port decided to make an offer itself, in hopes of finally settling the matter. In September, the port struck a $5.75 million deal with the bank.
But the sale needed the approval of a federal judge because the IBRC sought bankruptcy protection for its American assets. Channelside's fate has been stalled in court ever since.
The Channelside legal mess got even messier in December when Liberty sued both the port and the bank in federal court to stop the sale. Liberty's investors alleged that the port sabotaged their deal so the port could buy Channelside and take advantage of the low price that Liberty had negotiated with the bank.
The original loan for Channelside was $27 million. Liberty first offered $7 million for the building, but after the port's veto, they tried and failed to buy just the loan for $5.5 million from the bank. The port's $5.75 million offer, Liberty believes, is based on its offer for the loan.
The bank and the port both opposed Liberty's lawsuit. The port said Liberty's interests were never hurt because they never signed an actual purchase agreement to buy Channelside, just letters of intent to buy it.
Liberty, the port and the bank were scheduled to argue their respective cases at a hearing Friday in front of U.S. Bankruptcy Judge Christopher Sontchi in Delaware.
But ice and snow closed the federal courthouse Thursday in Wilmington. Weather may lead to more disruptions today.
At least one attorney, Anthony, is already in Delaware with the check from Regions Bank made out to the representatives of the IBRC. Liberty filed a document from the bank into the court record confirming that the $7 million was ready to go.
If the hearing does take place today however, it seems unlikely that Channelside will change hands anytime soon.
There are many legal questions to be resolved: Would the judge really kill a deal between two willing partners, the port and the bank? Would the court force the bank to sell Channelside to a buyer, Liberty, that it may no longer want to deal with? It's also the job of the bankruptcy judge to get the best price out of the Irish bank's distressed assets.
Regardless, Liberty said it stands ready to buy Channelside. And they're ready to back it up in court with a guaranteed seven-figure check.
"Our client is ready, willing and able to close," Anthony said.
Jamal Thalji can be reached at [email protected] or (813) 226-3404. Follow him on Twitter @jthalji.