Homeowners at an Abaco resort/marina development were shocked and “a bit freaked out” after a representatives from Grant Thornton (Bahamas), backed by police officers, took over the offices of Orchid Bay removing the long-standing property managers on December 12, 2013.
Backed by police, and claiming authority under a U.S. Bankruptcy Trustee in Atlanta, Georgia, the law firm of Grant, Thornton in Nassau took control of the Orchid Bay gated neighborhood and marina on Great Guana Cay changing the locks at the Orchid Bay office and marina.
U.S. Bank Synovus is seeking to recoup from W.B. Johnson Investment Company, Monarch Flight, LLC, and William B. Johnson over $5 million on a defaulted agreement per an October 5, 2011 court ruling.
WB Johnson is the former owner of the Ritz Carlton Hotels and his company William B Johnson International, LLC owns the outstanding and issued shares of Guana Cay Abaco Development Company which owned the assets of Orchid Bay.
Since the takeover of the property, Derek Sweeting of Grant, Thornton has been placed in charging of the resort/marina and are keeping business operations going. However, second-homeowners are having concerns along with the confusion over what is happening.
Jon Moseley, second-homeowner at Orchid Bay, expressed concern of how an accounting firm will run a fuel dock, restaurant/marina and if indeed they have all necessary permits and licenses to legally operate.
“The nice young man who pumped my gas into my golf cart admitted that he is an accountant and knows nothing about pumping gas, and didn’t know where the gas went in to a golf cart,” Mr. Moseley said. He added that when another resident tried to pay for gasoline for his boat with a check he was told they don’t know what business entity he would write a check to.
“If they don’t know what business entity is running the fuel dock, how can it have licenses and permits to store thousands of gallons of gasoline and diesel fuel?”
Mr. Moseley, an attorney from Virginia, said “None of us understand why it was appropriate or necessary to handle any of this through an armed invasion of Settlement Harbour by Synovus Bank through Grant Thornton.”
He said the only question he believes needs answering is whether the entity that purchased Orchid Bay from the Royal Bank of Canada bought Orchid Bay “free and clear” of the loan owned to Synovus Bank in Columbus, Georgia, or bought Orchid Bay “subject to” the loan owned to Synovus Bank.
“The allegation is that a wealthy homeowner in Orchid Bay purchased Orchid Bay in foreclosure from the Royal Bank of Canada, putting Jimmy Albury in management for the actual running of Orchid Bay to preserve its value, for too little money,” he said.
However, he said that if the new entity bought Orchid Bay subject to the debt owed to Synovus Bank, then the real purchase price was the cash outlay plus any other debts that have to be paid.
“So the purchase price was not “too little” if the new entity still owes the loan to Synovus Bank. The real purchase price is the amount paid to Royal Bank of Canada plus the debts that still have to be paid off. What in the world does any of that have to do with an armed invasion of Settlement Harbour on Great Guana Cay?” he said.
He asked why couldn’t the court simply decide whether the new owners of Orchid Bay avoid the prior loans, or still owe the prior loans and buy Orchid Bay “subject to” the loan to Synovus Bank?
Mr. Moseley indicated that there are further issues of concern surrounding WB Johnson which include bankruptcy and litigation, though not directly related to Orchid Bay Development, indicate the “kinds of games he is playing and what the origins of the problem are.”
He indicated that according to a Lender Liability Law Report in May 2012 it was noted that WB Johnson was, as late as September 2, 2011, trying to borrow another $200 million against Orchid Bay, on top of what he had previously borrowed.
The report said that as late as September 2, 2011, Johnson represented to the banks and the courts that some of the land — unimproved land — in The Bahamas was worth “several hundred million dollars.”
He also claimed to the banks and the courts that $200 million was needed to “complete” Orchid Bay. However, the original plan for Orchid Bay is complete. None of the $200 million Johnson was seeking to borrow is actually needed to “complete” Orchid Bay.
“There were plans to expand Orchid Bay but this was not at all necessary to Orchid Bay’s completeness or successful operation,” Mr. Moseley said.
The report also indicated that WB Johnson claimed that a horse farm in Tennessee worth perhaps $5 million was worth $75 million.
Paul “Andy” Gomez, managing partner at Grant, Thornton said, “There are many issues on the table, and this is the beginning of a long road.”
“We’re going to investigate all property transactions in the last five years to make sure they were properly authorized.
“My aim is to ensure my client’s [Synovus] claim is perfected, get their money back to my client, assess the true value of the property and then potentially sell it.”
The Alburys, though, have indicated their intention to take legal action to overturn the Grant Thornton takeover.
Their attorney, Roy Sweeting, of Glinton, Sweeting and O’Brien, in a June 4, 2013, e-mail response to Mr. Gomez alleged that the court orders he was operating under were “wholly defective”.
He urged the Grant Thornton accountant to “act in good faith” given “the precariousness of your own position”.
Legal actions between the parties are ongoing while Grant, Thornton keeps the properties in operation.