City votes against Reese

Maitland has cast its "no" vote for developer Bob Reese's bankruptcy plan.

Bob Reese, owner of Downtown Maitland Property Owner LLC, formerly Brossier Co., has submitted his plan to exit Ch. 11 bankruptcy protection, which he filed in March to halt a foreclosure auction on the Royal Plaza and former Winn-Dixie properties — crucial pieces of the proposed Maitland Town Center.

The lender, Mercantile Bank, will reschedule the foreclosure auction if Reese's plan to emerge from bankruptcy is not approved.

"If the plan is not confirmed on Oct. 6, Mercantile will once again go forward and have the foreclosure sale on the courthouse steps in Orange County on Oct. 8," said Maitland's bankruptcy attorney Roy Kobert. "It's no secret that Mercantile Bank is opposed to this plan."

Reese owes Mercantile about $8.3 million. He also owes 2007, 2008 and 2009 taxes on the properties.

The plan that Downtown Maitland Property Owner submitted states that the entity can cure the defaults on the properties and adhere to the existing Maitland Town Center development agreement timeline.

Reese has proposed to bring in a venture partner that will put up $25 million of funding for the downtown project and in exchange, have a majority stake. He has to identify the venture partner before the Oct. 6 hearing.

"There's currently no proof that the venture partner exists," Kobert said.

Reese also included a letter from Harrell Hospitality Group of Dallas, Texas, which states that they will provide $5 million in financing or capital in order to purchase more property for the project.

But, Kobert said, it is a "non-binding letter of intent."

"It cannot be enforced," he said. "It's only signed by the debtor (Reese)."

Councilman Phil Bonus asked Kobert if the city should be concerned with Harrell. Kobert told him he had Googled the firm and "am not impressed in terms of qualifications."

City Attorney Cliff Shepard said if Harrell was serious about taking over the Town Center project, the firm would have made contact with the city.

"If you were in that group's position… and they hadn't called someone at the city to find out about the primary asset they're getting hold of, it may be an indication they're not as interested as the letter would make it seem they were."

Next step

All of the creditors involved must now vote for or against the bankruptcy plan. The city can change its vote anytime leading up to the Oct. 6 hearing.

"It's important to ballot early … so there's no misconception of where the city of Maitland comes out in this equation."

City Council directed Kobert to file their opposition to the plan on Aug. 10.

Maitland wasn't listed as a creditor until July 21, when Reese amended the schedule.

What about the land?

Councilman Howard Schieferdecker had one question for the bankruptcy attorney: "When is the soonest we can get our land back?"

If the plan isn't approved, the properties will be auctioned off on Oct. 8 and will have a new owner. The terms of the development agreement will be transferred to the buyer, but the buyer doesn't have to fulfill it.

"They will have to cure the same defaults, which are in my judgment, incurable," Shepard said.

The City Council can terminate the development agreement after Oct. 6, once the bankruptcy hold is lifted.

The city plans to send an elected official to the Oct. 6 hearing to represent the city.