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Bon Secour Village developers ordered to repay Wachovia

Mobile Press Register
Wednesday, February 11, 2009
Staff Reporter

Wachovia Bank has won a $20.4 million judgment against the developers of Bon Secour Village, who consented in advance to the ruling and have joined the lender in trying to sell about 900 acres of the Gulf Shores property to clear the debt.

"There was no reason to have a trial because we know what we borrowed and we know what we owe," said David Anderson, a Birmingham-based lawyer who represents Bon Secour Village LLC and two of its principals. "We don't dispute the debt."

Ending the federal foreclosure case, Anderson said, allows the bank and the developers to concentrate on selling the property, once pegged to be home to a $500 million town-within-a-town development.

U.S. District Judge Kristi DuBose signed an order last week requiring Bon Secour Village LLC to repay the $20,416,689.17 outstanding on a loan it took out with the North Carolina lender in late 2005. The loan, originally for $20.36 million, was used to buy 26 acres on the Intracoastal Waterway and 880 acres on the north side of Waterway Boulevard West, as well as provide cash to build a 3,500-square-foot sales office and a 60-slip marina.

The quintet of developers who made up Bon Secour Village defaulted on the loan in 2007 and the property — much of it piney woods along the Intracoastal Waterway's northern shore — has been managed by a court-appointed receiver since then.

The receiver, Jeffrey Granger of the Tampa, Fla., based Focus Management, will have spent nearly $400,000 on the property since taking it over, much of that money going toward legal bills, marketing expenses and his own company's fees, according to a recent court filing.

In that Jan. 20 filing, Granger's lawyer, Jennifer Harris, reported that while a court-ordered auction of the property last fall yielded no acceptable bids, it did generate interest in the project from investors in 14 states and several countries.

Of the 69 parties that inquired about the property, 38 completed confidentiality agreements that allowed them to bid on the project, Harris wrote. Auctioneers Tranzon Driggers will continue to market the property and there is a belief that changes in "credit conditions" and other factors "will create an environment conducive" to selling it, Harris wrote.

"With the holiday season and its traditional slowdown in commercial transactions now over, expectations are high that the former high bidders will submit revised offers, while other interested parties will submit new offers," she wrote.

Should the property sell, the proceeds would be used to clear as much of the $20 million judgment as they can, Anderson said.

"Being practical, the property is probably not going to sell for the value of the judgment," he said.

The company has no assets other than the property, Anderson said, and faces several unresolved lawsuits in state court. Additionally, three of Bon Secour Village's partners — Cullman brothers Josh and Eddie Canaday and Michael Knight of Destin — filed for Chapter 11 bankruptcy protection last summer, reporting debts, in each the Canadays' cases, exceeding $160 million.

Anderson said that the other two Bon Secour principals — Atlanta developer Rick Skelton and Birmingham businessman Clint Guthrie — remain interested in helping to develop the 1,000 acres they assembled, which, because of special zoning, are far more valuable together than if they were broken up in individual parcels.

"It needs to be developed and it will," Anderson said. "My clients will lose some money and the bank will lose some money but it will be developed."




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