MIAMI— Spirits LLC, a wholly owned subsidiary of Lehman Brothers Holdings Inc. and three of its wholly owned subsidiaries (FL Spirits), have filed for Chapter 11 bankruptcy protection for its Canyon Ranch Living Hotel and Spa condominium property in Miami Beach.
The voluntary Chapter 11 petitions were filed in US Bankruptcy Court for the Southern District of New York on Sunday. FL Spirits has filed a motion to pursue a sale of the facility and reports in a press announcement that it has entered into an acquisition agreement with stalking horse bidder, 360 Miami Hotel & Spa LLC. Upon a successful closing of the transaction, the project will be managed by the Enchantment Group, a premier operator of award-winning resorts and destination spas, including Mii amo, a destination spa at Enchantment Resort in Sedona, AZ. Under the proposed agreement, the purchaser will acquire the hotel lot (including the spa) and 13 condominium units for $12 million subject to higher and better offers.
Spirits LLC states that the sale agreement contemplates a court-supervised auction process, which is designed to achieve the highest or best offer for FL Spirits’ assets. The agreement with the purchaser sets the floor, or minimum acceptable bid, and is subject to bankruptcy court approval and certain other conditions.
The project was still under construction when the failed investment bank picked it up through a deed in lieu of foreclosure in 2009. Court papers state that the Canyon Ranch hotel and condominium project has not generated enough cash to cover the Lehman loan, according to a Dow Jones report. Debts on the property amount to approximately $17 million, not including about $10 million in disputed litigation claims, court papers indicate.
A deal to sell the property fell through earlier this year after owners of condominium units tied it up in court. The current operator of the hotel, Canyon Ranch Living, is not a debtor, and operations at the property are expected to continue without interruption, during and after any court-approved sale and closing, Spirts LLC states in its announcement. Canyon Ranch Living is not affiliated with Lehman and is managing the hotel and condominium facilities pursuant to a management contract. See Dow Jones story.