By Paul Brinkmann, South Florida Business Journal
Attorneys for the lender on the stalled Chub Cay Club resort in the Bahamas are still trying to collect a $24 million judgment against three Fort Lauderdale businessmen who invested in the project.
In the most recent action, a Broward County Circuit Court judge approved an effort to include Cheryl Pearson, the widow of Kaye Pearson, one of the developers, as a defendant in the case. Kaye Pearson was best known as the founder of the Fort Lauderdale Boat Show.
Judge Mark Speiser granted the order Feb. 8, after attorneys for the lender, BA Chub Cay LLC, alleged that Kaye Pearson transferred assets to his wife in 2008, as the lender pursued the developers to enforce personal guarantees they had made on loans for the resort project.
BA Chub Cay, which was an affiliate of Blackacre Capital Management, received summary judgment in July 2009 against Kaye, Bob Moss and Walter McCrory in New York federal court. The award covered the $16 million principal and $8.2 million in interest.
As of 2009, Chub Cay was operating as a resort with customs, an airstrip, full marina and restaurant under a receiver appointed by the Bahamian government.
Tom Angelo, an attorney for lender BA Chub Cay, said the senior lender on the project settled out, and he represents the former mezzanine lender.
Instead of suing Cheryl Pearson separately, Angelo filed a motion for BA Chub Cay in Kaye Pearson’s probate case to “implead” her, or include her, as a defendant.
The motion alleges that Kaye Pearson transferred 100,000 shares of stock in his company, KAP Group LLC, to his wife in April and July 2008, when Kaye Pearson was already facing efforts to enforce the personal guarantees on the loan. The motion does not say how much the shares were worth.
According to the motion, the transfer was civil fraud because Kaye Pearson made it to an insider, didn’t disclose it, transferred substantially all of his assets, did not receive equivalent value in return and transferred the funds shortly before a substantial debt was incurred.
“We’ll be able to accomplish more discovery now, and find out where that money or the assets went after the transfer,” Angelo said.
Mike Goldberg, a bankruptcy attorney with Akerman Senterfitt, said the attorneys for lenders in South Florida often encounter transfers to wives or family members during efforts to pursue recovery.
Goldberg said Florida has strong laws that help to protect common assets of married people, known as ‘tenancy by the entirety,” but the Pearson transfer went one step beyond that.
Pearson, McCrory and Moss were among 41 other local investors who purchased the 1,000-acre island in 2004 and developed a marina with more than 100 slips, according to a news release. The development’s pool and first 16 luxury oceanfront homes have been completed.
A spokeswoman for Moss said Feb. 15 that he still intends for the sale of the property to satisfy the judgment.
Moss has made public announcements that he, and not his construction company or any other business interest, is responsible for the loss, and that he hopes the project will be a bigger success after more economic recovery.
Moss said the economy delayed a possible sale of Chub Cay Club, anticipated in 2008, and dramatically slowed real estate sales on the island.