The sale of the Daufuskie Island, S.C., property is scheduled for this week, though it received no qualified bids for the property last week, with the minimum asking price set at $19 million. A U.S. Bankruptcy Court hearing is scheduled for August 30, when the property’s biggest creditor is expected to walk away with the title.
A sale of the bankrupt Melrose Resort on Daufuskie Island, S.C., is scheduled for this week, but any hopes of a fast-paced bidding war among rival buyers were dashed last week, the Charleston, S.C., Post and Courier reported.
Offers on the roughly 400-acre seaside property were due last week with a minimum asking price set at $19 million, the Post and Courier reported.
“We have not received any qualified bids for the property,” said Columbia bankruptcy attorney Rick Mendoza, who represents Melrose’s Utah-based owners. “There have been numerous inquiries from potential buyers, many of whom seem to be genuinely interested—as opposed to ‘tire kickers’—but none have submitted an offer to us.”
The action now turns to a U.S. Bankruptcy Court hearing scheduled for August 30, when Melrose’s biggest creditor is expected to walk away with the title in exchange for the millions it’s owed. Future plans for Melrose have not been disclosed, the Post and Courier reported.
The idled resort, which includes an inn, rental cottages, marina, raw land and Jack Nicklaus-designed golf course, occupies a prime piece of Calibogue Sound coastline on a remote island. The resort now known as Melrose came about in the mid-1980s. But it’s never quite lived up to its financial expectations, partly because Daufuskie is accessible only by boat or ferry, a logistical obstacle for fairweather visitors, the Post and Courier reported.
In 2009, the resort filed for bankruptcy under a previous owner, who blamed the economic “chaos” created by the financial crisis of the times and other challenges. Melrose has mostly languished since then. It has no employees or revenue sources—it has just $18 in its First Citizens bank account, according to the latest monthly operating report. The golf course and tennis courts are closed and the once-quaint inn has been shut down for years, the Post and Courier reported.
The redevelopment plan envisioned by the Utah investors—they bought Melrose at a 2011 bankruptcy auction for $13 million—required more money and time than originally anticipated, the Post and Courier reported.
Odeon Singapore Ltd. is in the on-deck circle. Affiliated with a Netherlands-based maker of sausage casings, the obscure lender has sunk more than $27.5 million into Melrose, according to court documents. And it has openly acknowledged that it’s eager to cut its losses, sooner rather than later, the Post and Courier reported.
“Time is costing us,” an attorney for the company said at a June hearing.
Odeon was pushing for a speedy sale to stop the bleeding and recoup some of its money with minimal delay. Other companies that are owed money by Melrose objected, arguing that a hastily organized transaction could leave them with little to nothing, the Post and Courier reported.
But Odeon, as the Daufuskie resort’s biggest secured creditor, holds most if not all the cards. It’s also what real estate brokers call “a motivated seller.” Odeon was willing to take an $8.5 million haircut, saying it would let Melrose go for about $19 million in the hopes of attracting other bids. It also agreed to split net proceeds above the $19 million price with the rest of the creditors, the Post and Courier reported.
Odeon has been trying to wrest away ownership of the troubled resort since 2014, when it began the time-consuming foreclosure process. A courthouse auction was scheduled for last March in Beaufort, but it was canceled hours before the sale when Melrose’s Utah investors filed for federal bankruptcy protection to buy them time, the Post and Courier reported.
They won’t have that option this week, the Post and Courier reported.
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