Brazilian developer Gilberto Bomeny wants to put the brakes on Cirrus Real Estate taking over his distressed downtown Miami redevelopment site, in a predicament playing out between Christmas and New Year’s.
Bomeny entities that own the parcel at 340 Biscayne Boulevard, home to a Holiday Inn built in 1950, asked a Miami federal bankruptcy judge last week to throw out Cirrus’ $77 million credit-bid victory and order a new auction. In a Dec. 25 motion, the entities allege that “constant changes and irregularities” in the sale process shut out rival bidders.
Bomeny’s request sets up a showdown before U.S. Bankruptcy Judge Laurel Isicoff at a hearing set for Wednesday, Dec. 31. Isicoff will either approve Cirrus’ purchase or reopen bidding for the nearly 1-acre site, which has city approvals for an 82-story, 950,000-square-foot tower with 374 condos, 120 hotel rooms, offices and retail, along with 500 parking spaces.
Attorneys for Bomeny’s entities and New York-based Cirrus, led by Joseph McDonnell, did not respond to requests for comment.
Bomeny’s entities paid $65 million for the 10-story hotel with 200 rooms in 2015. The owner filed for Chapter 11 protection earlier this year to stave off a UCC foreclosure by a Cirrus affiliate that alleges Bomeny’s entities defaulted on a $70 million loan. When U.S. Bankruptcy Judge Laurel Isicoff authorized the auction last month, she also approved a $101.5 million credit bid by the Cirrus affiliate, which is the largest creditor.
Cirrus won the Dec. 17 auction by submitting the highest offer at $77 million.
Attorneys for the lender sought a court order five days later to force Bomeny to sign and finalize the purchase and sale agreement. But the Bomeny entities want the judge to disregard the auction results and reschedule the sale, according to Bomeny’s motion.
The auction, conducted by Sotheby’s Concierge Auctions, was initially set to begin at 6 p.m. on Dec. 17, the filing states. But two days before the sale, the auctioneer told Bomeny it would start at 4 p.m., the Bomeny entities allege. Then the evening before, Sotheby’s allegedly pushed the time up again to 2 p.m.
On auction day, one of Bomeny’s agents tried to log in at 2 p.m. but couldn’t access the platform and was told by an online support chat that bidding would actually start at 6 p.m., even though the sale in fact ran from about 2:30 p.m. to 2:50 p.m., the motion alleges.
Cirrus was the only bidder to participate in the online sale. Bomeny and his lawyers only learned of the repeated time changes because they “contacted the auctioneer directly and repeatedly,” and that would-be buyers had no centralized way to track the shifting schedule, the motion states.
After the auction closed, Bomeny learned that “several” prospective bidders who intended to participate were unable to do so because of the last-minute time change, a lack of communication from Sotheby’s and technical issues that prevented registration or payment of the registration fee, the motion alleges.
Brokers told Bomeny they represented clients who intended to bid and “still desire to submit offers privately or through an auction,” according to the motion. At least one of the bidders was going to bid almost double the $77 million amount by Cirrus, the motion alleges.
If the judge approves Cirrus as the winner, no other creditors would receive any proceeds from the sale of 340 Biscayne, the motion states. The Bomeny entities are requesting a new auction date for Feb. 9.