A lender seeking to recoup $6.3 million in mortgage debt has initiated a UCC foreclosure sale for the distressed Banyan Cay Resort & Golf Club.
Banyan Cay Resort Fund has set a Feb. 17 auction for the West Palm Beach hotel and adjacent development sites, according to a notice of sale. Brock Cannon with Newmark is the broker. Moecker Auctions in conjunction with Mannion Auctions is handling the UCC foreclosure sale.
The winning bidder stands to gain control of the unopened 150-room luxury hotel at 2020 Banyan Way, an adjoining 18-hole golf course designed by Jack Nicklaus and surrounding lots where the developers planned a high-rise condominium, 33 single-family homes and 20 villas.
Project partners Domenic Gatto Sr., Domenic Gatto Jr., Kim Pilar and their development entity Banyan Cay Resort & Golf, are also trying to stave off a separate foreclosure lawsuit in Palm Beach County Circuit Court filed by another lender. In 2015, the partners paid $26 million for the property formerly known as The President Country Club.
Stanley Klett Jr., an attorney for the developers, declined comment. Their other lawyer, Gerard Catalanello, did not respond to requests for comment.
The Banyan Cay project has been mired by delays and money troubles. In addition, one of the partners, Gatto Jr., was federally charged last year with conspiracy to commit healthcare fraud in connection with an alleged $65 million scheme.
In July, U.S. Real Estate Credit Holdings III-A sued the developers for alleged nonpayment of a $61 million construction loan to build the hotel. The Gattos and Pilar also secured a $19 million construction loan for the 22 villas that was increased to $33 million in January, according to the complaint. The mortgages are structured so that both loans are in default if either one became delinquent, the lawsuit states.
The developers failed to obtain a certificate of occupancy for the hotel to open by April 30, and the project needs another $13 million to finish construction, the complaint alleges.
Project contractors also have pending lawsuits against the developers alleging nonpayment.