Sunday, June 17, 2018
Business

Fate of Channelside retail complex could be delayed by latest legal battle

TAMPA — The auction to buy Channelside Bay Plaza is on, and a winner could be declared as soon as Tuesday.

But, no surprise, the validity of the auction has now become the next legal battleground for control of the downtown retail complex.

The auction was ordered weeks ago by the Delaware bankruptcy judge overseeing Channelside, which is a distressed asset of the Irish Bank Resolution Corp.

The "special liquidators" in charge of selling off the distressed assets of the IBRC revealed the first details about the auction in documents filed in federal bankruptcy court on Thursday.

The liquidators are "currently proceeding with an open and transparent auction process for the assets relating to Channelside Bay Plaza," the documents stated.

"Open and transparent" does not mean the auction is being conducted in public, however. Bidders, for instance, were required to sign nondisclosure forms. They would not be permitted to even acknowledge they are bidders.

That's why it's unclear if two of the top contenders vying for control of Channelside, the Tampa Port Authority and real estate investors Liberty Channelside LLC, have entered bids. Neither would confirm for the Tampa Bay Times whether they made a bid.

Largo real estate investor Benjamin Mallah Sr., who announced his intention to pay $7.5 million for Channelside back in March, recently told the Times he didn't put in a bid because of legal complications surrounding the property.

The liquidators said that they have "received multiple binding and irrevocable bids" for Channelside to "generate the highest or otherwise best offer for (Channelside) for the benefit of the IBRC and its stakeholders."

The liquidators said they intend to file court documents publicly declaring the winner "on or around" Tuesday.

It's not enough just to win the bid, though. The bankruptcy judge must approve the winner, and the liquidators said that will likely take place at a July 15 court hearing in Delaware. That's when the losers can challenge the winning bidder.

But Liberty's not waiting that long. The group filed an emergency challenge to the auction rules Thursday.

Liberty objected to the IBRC's "methodology" for conducting the auction, but many of the specific objections were not made public. Because of the secretive nature of the auction, Liberty's attorneys had to ask the judge for permission to file their legal challenge "under seal," or in secret.

That's because "Liberty is prohibited from disclosing pertinent information that is pertinent pursuant to the Confidentiality Agreement," according to its filings. That would suggest that Liberty is one of the bidders for Channelside.

The Liberty complaint stated that the confidentiality agreement "contained unacceptable language" that the IBRC has "sole discretion" to conduct the auction.

That may be the crux of the next legal battle. Bankruptcy judges often auction off distressed assets using rules laid out by the court.

But in this auction, it appears that the IBRC is using its own rules. In its own court filing, the IBRC's lawyers said that "this Court has previously stated that it would not require the (liquidators) or IBRC to seek approval of any bidding procedures prior to the sale hearing."

The bank's lawyers want the judge to wait to deal with Liberty's complaint at the July 15 hearing, after the winner of the Channelside auction has already been declared.

But Liberty is trying to get an emergency hearing before the winning bid is announced Tuesday.

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