Barnes Bay: No prospect for plan; dismissal to follow fee resolution

By Jim Witters

Wilmington, Del., Oct. 3 - There is no prospect for a confirmable Chapter 11 plan in the Barnes Bay Development Ltd. case because the debtors are out of cash and assets, an attorney for the debtors said Monday during a hearing in the U. S. Bankruptcy Court for the District of Delaware.

"No plan has been proposed that [lender] Starwood [Capital Group] is prepared to sponsor," debtors' attorney Michael P. Cooley told the court. "The debtors are truly done. There is no more cash. There are no more assets."

The only remaining unresolved dispute in the case is the payment of professional fees, Cooley said.

The debtors, the official committee of unsecured creditors and three creditors who had sought a dismissal of the case reached an agreement on Friday to postpone dismissal until all professional fees have been submitted and Starwood can raise any issues it may have with payment.

Paying the freight

"It has been the practice of this court that, when a case is run for the benefit of the lender, then the lender should be prepared to pay the freight," Cooley said.

Starwood attorney Richard A. Chesley said in court that his client has been "paying the freight" throughout the case and agreed with the stipulation entered by the debtors and the other parties. He said that Starwood has paid $6.5 million in professional fees for the case already.

The only objection Starwood raised Monday was to a request by one of the three purchase-sale-agreement holders, who sought to revisit the relief from the stay Starwood received. The relief from the automatic stay allowed Starwood to transfer title to Barnes Bay's Viceroy Anguilla in the British West Indies to Starwood affiliate SOF-VIII-Hotel II Anguilla Holdings LLC.

Chesley said the property had been transferred and the motion was moot.

Judge Peter J. Walsh denied the motion to revisit the relief from stay.

All attorneys' applications for payment are to be filed with the court by Oct. 14.

Walsh said that once all of the applications are available, the debtors and the creditors committee should file a joint motion for approval. After that, Starwood can answer the motion.

Dismissal this month

A representative of the U.S. Trustee's office said in the hearing that he does not oppose the agreement on the fees and is prepared to file a motion for immediate dismissal of the Chapter 11 case as soon as the fee dispute is resolved.

Walsh said that he hopes to schedule a hearing on the fees and dismissal of the case before the end of October.

As part of the stipulation approved by Walsh on Monday, the stay was lifted for all parties, allowing the purchase-sale-agreement holders to pursue relief in the Anguilla courts.

Attorneys for those creditors said they hope to have a provisional liquidation trustee appointed in Anguilla to investigate and pursue claims against Barnes Bay directors and officers and those indemnified by Starwood under its debtor-in-possession financing agreement.

Walsh said his court retains jurisdiction over any liquidation actions until he dismisses the cases.

Barnes Bay, the developer of the Viceroy Resort and Residences in Anguilla, British West Indies, filed for bankruptcy on March 17, 2011 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 11-10792.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.