Efforts to complete Scrub Island Resort’s bankruptcy proceeding are underway but its biggest creditor continues to object to its restructuring plan.
The bank asserts that the company’s assets are worth less than $50 million. Initially, the bank attempted to foreclose on the resort via an application in Virgin Islands Commercial Court but SIDG declared bankruptcy in the US court weeks later. The resort developed a plan to restructure its debts and emerge from bankruptcy, but FirstBank has objected, asserting that the plan does not treat it fairly.
The companies’ plan called for FirstBank to receive an immediate $7.5 million cash payment and $30 million over the next five years in exchange for forgiving an estimated $84.8 million in claims against the resort.
The bank objected and has asserted that a better solution would be to bring in a new management team to run the resort. According to documents filed Friday, the resort has filed an application to “cram down” the plan, asking the Judge Michael Williamson to impose it over the bank’s objections. Mr. Williamson has said he will consider the motion.
Bank lawsuit
Additionally, on June 24, the resort filed suit against the bank alleging that a former resort executive sent dozens of emails “secretly undermining” SIDG’s interests while it was in negotiations with the bank to restructure loans. According to the suit, beginning in early 2012 bank officials repeatedly received confidential information from resort project manager James Talton and offered to pay him a commission if he was able to privately find another investor willing to buy the resort’s debt from the bank. Court documents show that the resort plans to present dozens of emails reportedly exchanged between Mr. Talton and the bank at the trial. The bank and Mr. Talton have both repeatedly denied that any improper contact occurred. The lawsuit will likely he heard in the coming months.
{fcomment}