A bankruptcy court judge has approved the sale of The Park condos, but the stalled uptown tower's saga isn't over, officials say.
Remaining questions include the plans for the 21-story, 106-unit building and how the money from its sale will be distributed among condo buyers and other creditors, if at all.
Summitt Shores, which placed the high bid after a foreclosure auction in August, will buy the project for $19 million, court documents say. The company, an entity created by several investors, including Carolinas businessman Leonard Ray Watts and a Utah business called Management Solutions Inc., has about 45 days to close on the property.
Most of the money from the sale will likely go to the project's lender, BB Syndication Services Inc. of Wisconsin. But bankruptcy trustee Langdon Cooper will set aside $4 million that could be used to refund money to some of the would-be buyers for The Park, who have each invested thousands on deposits, if a judge finds in their favor.
Cooper will also set aside money to hire a forensic accountant to determine whether fraud was a factor in the original project's collapse. He said $8 million to $12 million is missing from the books on the project, and that he'll set aside $100,000 from the sale to investigate where the money went once the sale closes.
Construction started several years ago on The Park, a luxury tower at Caldwell and Third streets. Its developer, 222 South Caldwell Street Ltd. Partnership, part of Verna & Associates of Charlotte, accepted deposits from about 80 buyers for the units, which were to be sold for up to $700,000 each. The deposits were to be used for construction.
But work on the project stopped in January, with the building about 70 percent complete, and the project went into foreclosure this summer. Court documents say the developer owed more than $28 million on its $30.7 million loan.
Soon after the foreclosure, three contractors filed an involuntary bankruptcy petition, forcing the project into court and temporarily halting foreclosure proceedings.
Bankruptcy court Judge Craig Whitley approved the sale to Summitt Shores on Friday after three days in court, as attorneys wrangled over the language in the contract and other details. The sale papers were filed in court Monday, Cooper, the trustee, said.
If Summitt Shores, which has deposited $1 million for the tower already, closes on the property, its title will be free of all claims. Attorneys for the company did not immediately return phone calls and e-mail messages Monday, and in recent weeks, company officials have declined to comment on their plans for the tower.
Still at issue is how the money from the sale will be distributed. Attorney Deborah Fletcher of Kilpatrick Stockton, who is representing the condo owners, has asked the court to rule on whether owners are entitled to their money back, saying those who made deposits before BB Syndication made the construction loan in February 2006 deserve a refund.
Cooper says he thinks that's unlikely. Still, condo owners will get their day in court, he said.
If the deal falls through and Summitt Shores cannot close, the condo tower will go back into foreclosure – which could yield a smaller return for the lender and likely no money for other creditors, Cooper said.