The troubled Costa Hollywood Resort in Hollywood Beach filed for Chapter 11 bankruptcy protection five months after its lender sought to foreclose on the condo-hotel.
The bankruptcy filing marks the latest challenge for the 326-unit project at 777 North Ocean Drive that opened in October.
New York-based Madison Realty Capital lent $70 million to the development group in 2016. In April, the lender filed a foreclosure suit against the development group and its principal, Moses Bensusan, alleging the group was in default of $41 million.
As part of its foreclosure suit, Madison Realty is trying to seize 52 unsold units and the common area of the condo-hotel.
Peter Russin, an attorney who represents the development group in the bankruptcy, did not immediately respond to a request for comment.
According to the lawsuit, Costa Hollywood Property Owner defaulted on the loan from Madison Realty in April 2017, but the lender entered a forbearance agreement and extended the term of the loan.
The bankruptcy case was filed in a U.S. Bankruptcy Court in Fort Lauderdale last Thursday. The filings show the development group has between $50 million to $100 million in assets and liabilities. The South Florida Business Journal first reported the news.
Construction at the development started in 2013, and the developer began marketing the condos to investors in South America and Argentina.
The foreclosure filing is significant because it could signal growing indicators of distress in South Florida’s real estate market. These indicators include an increase in residential home foreclosures and in vulture funds raising money.
Madison Realty Capital said it has completed more than $10 billion in debt and equity transactions since it was founded in 2004. It is increasing its presence in South Florida. The company provided a $225 million construction loan for The Residences at Mandarin Oriental in Boca Raton in July.