The saga of a distressed downtown Miami site appeared to be over after Cirrus won the property with a $77 million bid last month.
But a bankruptcy court judge recently ordered a new auction after the property owner, Brazilian developer Gilberto Bomeny, complained that the bidding process freezed out potential buyers offering more money.
U.S. Bankruptcy Court Judge Laurel Isicoff set a Jan. 28 date for a new auction after hearing arguments on Dec. 31 from attorneys representing Cirrus and two Bomeny entities that own the nearly 1-acre parcel at 340 Biscayne Boulevard, home to a Holiday Inn built in 1950.
“To ensure that all interested parties have sufficient time to perform due diligence on the property and complete the vetting and bidder registration process, it was determined that additional time was appropriate,” said Chad Roffers, CEO of Sotheby’s Concierge Auctions, which is conducting the auction.
Bomeny bought the property with the 10-story, 200-room hotel for $65 million in 2015. The site is approved for an 82-story, 950,000-square-foot tower with 374 condos, 120 hotel rooms, offices and retail, along with 500 parking spaces.
Linda Jackson, the lawyer for the Bomeny entities, and Cirrus’ attorney Daniel Gonzalez did not respond to requests for comment.
An affiliate of New York-based Cirrus, Joseph McDonnell, is the largest creditor in a chapter 11 bankruptcy case the Bomeny entities filed last year to stave off a UCC foreclosure. Cirrus alleges they defaulted on a $70 million loan.
The judge authorized an auction that began taking bids on Dec. 4 and ended on Dec. 17 with a reserve of $70 million. The judge also approved a $101.5 million credit bid by the Cirrus affiliate. The lender was declared the winning bidder when the auction closed.
However, Bomeny’s entities filed a Dec. 25 motion seeking to throw out the auction results and redo the sale due to “constant changes and irregularities” in the sale process that shut out rival bidders. For instance, the hour when the auction was set to begin was changed several times by the auctioneer, Sotheby’s Concierge Auctions, 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. At least one of the bidders was going to bid almost double Cirrus’ $77 million bid, Bomeny’s lawyer alleged.
Cirrus disputed Bomeny’s assertions in a Dec. 29 motion, alleging the property owner was “unwilling to accept the auction’s outcome” and falsely accused “its handpicked auctioneer of mishandling the auction so gravely that potential bidders were unable to participate.”
Moreover, Bomeny’s potential bidders did not register for the auction and did not submit a $250,000 deposit to participate, the Cirrus motion states.
One of the bidders purportedly had been negotiating to buy the site for $140 million months before the auction, but did not follow through, Cirrus alleged.
