The troubled saga of Banyan Cay Resort and Golf Club in West Palm Beach continues to deliver new twists.
Westside Investment Partners backed out of its $102.1 million purchase of the 200-acre development site, which includes a completed Jack Nicklaus-designed golf course and a partially built hotel, filings in West Palm Beach federal bankruptcy court show.
Westside, a Denver-based real estate investment firm led by founder and managing principal Andrew Klein, was the sole bidder for the property at 2020 Banyan Way. It was put up for sale as a result of the project’s development entity filing for Chapter 11 protection in March.
Proceeds from the failed purchase would have paid off creditors, such as California-based Calmwater Capital and Banyan Cay Resort Fund, a mezzanine lender made up of EB-5 visa program foreign investors. In February, a Calmwater affiliate won a final foreclosure judgment for $94.1 million against Banyan Cay Resort & Golf, the development entity, for defaulting on a $61 million construction loan.
The mezzanine lender had sought a separate UCC foreclosure sale of the project to recoup $6.3 million in principal and interest from an affiliate of Banyan Cay Resort & Golf, previously led by Domenic Gatto Jr.
Westside’s Klein, Banyan Cay Resort & Golf’s restructuring officer Gerald McHale and attorney Joseph Peck did not immediately respond to requests for comment.
Westside ditching its plans to buy the Banyan Cay development site is a stunning reversal since Bankruptcy Judge Eric Kimball approved the firm’s stalking horse bid in June. At the time, Westside principal Otis Moore told The Real Deal that the company planned to finish the 150-room hotel, eyeing a Dec. 1 opening date.
Westside was in discussions with Hyatt, Hilton and other hotel companies, as well as scouting for a new golf course operator. It also was interested in finding a development partner for a condominium planned near the hotel, Moore said.
Gatto, the previous developer, had city approval to build a Hyatt-branded hotel, a 179-unit condominium, 28 single-family homes and 22 villas. In 2015, he paid $26 million for the site and opened the golf course two years later.
Construction of the hotel, the project’s first phase, soon ran aground as contractors filed lawsuits against Banyan Cay Resort & Golf for alleged nonpayment. In 2021, Gallo found himself dealing with another unrelated crisis when he was charged with federal conspiracy to commit health care fraud.
The pending indictment alleges Gallo participated in a $65 million scheme with reputed mobsters that entailed placing unnecessary orders for orthotic braces for Medicare beneficiaries. The co-conspirators allegedly include Colombo family consiglieri Thomas Ralph Farese, also known as “Tom Mix,” and Colombo family associate Pat Truglia, according to Florida Bulldog.
Gatto pleaded not guilty.