The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The receiver for a well-known Abaco resort/marina development has alleged that part of its real estate holdings have been sold at $15 million below market value, with its property manager placing himself in “numerous conflicting positions”.

Details of what is developing into a furious legal battle over the 203-acre Orchid Bay Resort & Marina are revealed in court documents obtained by Tribune Business, which allege that $16 million worth of property was sold for just over $1 million to clear a former Royal Bank of Canada (RBC) debenture.

Paul ‘Andy’ Gomez, the Grant Thornton (Bahamas) accountant, in his capacity as receiver for the resort’s parent company, Guana Cay (Abaco) Development Company, issued an October 7 writ over the sale against James Albury, Orchid Bay’s property manager, and an affiliated firm, Coastal Property Services.

An earlier June 18, 2013, affidavit filed by Mr Gomez illustrates how the legal dispute erupted after the Supreme Court appointed him as receiver for 100 per cent of the shares in Guana Cay (Abaco) Development Company.

Recalling how he travelled to Orchid Bay on May 27, 2013, accompanied by Jack Davis, the Deputy Provost Marshal, and his security consultant, Mr Gomez said he was met at the dock by Mr Albury.

The property manager allegedly referred to the $1 million debenture, and Mr Gomez claimed: “Mr James Albury proceeded to inform me that a company titled Coastal Property Services, presumably owned by his son, Chris Albury, had purchased the debenture from the Royal Bank of Canada.

“[He] further informed me that he was appointed as the administrative receiver over the assets of Orchid Bay..... Based on my discussions with Mr James Albury, in his capacity as the administrative receiver, he has entered into a transaction to sell some of the properties that are owned by [Orchid Bay and its parent.”

Alleging that Mr Albury had failed to provide details of the transaction, Mr Gomez alleged that “we have some concerns regarding the numerous conflicting positions that James Albury has placed himself in”.

This was because, apart from his capacity as Orchid Bay’s vice-president of operations, Mr Albury is also the administrator and a director of Coastal, the company holding the charge over its real estate.

And, in addition, Mr Albury and his wife, and their companies, had also obtained default judgments worth more than $434,000 against Orchid Bay and its parent over salaries and other sums allegedly owed to them.

The documents shed new light on the action taken last week by Grant Thornton (Bahamas) and its agents, which involved taking over Orchid Bay’s marina and restaurant, and removing Mr Albury as property manager.

Several homeowners had told Tribune Business they had been “a bit freaked out” by the manner in which the receiver took possession, but Mr Gomez, in an interview with Tribune Business yesterday, reassured them that they were not embroiled in his action.

“We’ve basically seized all the assets,” he added, suggesting he had to “proceed cautiously” due to the “lack of co-operation” by the Alburys.

Promising that home and golf cart keys would be returned to the homeowners once the receiver worked out which belonged to whom, Mr Gomez said: “We are sorting this out as we speak. There are significant issues regarding the direction this is going in.

“In terms of the operations of the homes, the last thing we want to do is damage the homeowners in this fight. My message to the homeowners is it’s not an issue. They’re not involved in this action, their properties are not involved, and by the end of the day this matter will be totally resolved.

“We’re new on the ground, and are just learning about who owns what. Once they [homeowners] prove ownership, and we have all the conveyances for the development, the keys will be released to the Alburys.”

The October 7, 2013, writ filed on Guana Cay (Abaco) Development Company’s behalf, alleged that the company obtained a $1 million loan from Royal Bank of Canada to finance further resort and marina-related development on January 2011.

The debenture was secured on 16 acres of undeveloped land in the Orchid Bay Yacht Club and Marina Subdivision, plus 30 lots.

Royal Bank ultimately demanded repayment on January 9, 2012, but on June 5 that year, the debenture and all rights under it were transferred to Coastal Property Services.

That company subsequently named James Albury to act as receiver over the assets secured by the debenture on January 29, 2013.

Alleging that Coastal had the duty to act in good faith, and obtain the best price possible for Orchid Bay, the writ alleged that the lots were sold to an International Business Company (IBC), Moradvis Ltd, for $1.23 million on June 12, 2013.

Urging that Coastal provide proof to show that the sale “was bona fide to an unconnected third party”, and that the price was the best obtainable, Mr Gomez’s writ alleged: “The said sale was at a significant undervalue.

“Pending expert evidence, the plaintiff believes that a reasonable per acre land value of the development is in the order of $562,000 for coastal lots and $260,000 for inland lots.

“As such, the Orchid Bay Lots have (and had as at June 2013) a market value in excess of $16 million.”

Alleging that Coastal had failed to obtain the best price, causing damage to, the writ then claimed that Coastal was using the debenture to secure other Orchid Bay-related debts despite it only applying to the original Royal Bank loan.

“Between January 2013 and June 2013, [Coastal] purported to accept the assignment of a number of debts and judgment debts from various judgment creditors of the plaintiff, the total value of which is believed to be in the region of S1.7 million,” Mr Gomez’s writ alleged.

“Without admitting the validity or finality of those judgment debts, it is the plaintiff’s position that those judgment debts are not lawfully secured by the debenture.

“Consequently, any step taken (or proposed to be taken) by the defendants to enforce the debenture over the Plaintiff’s property with respect to those judgment debts is (or would be) unlawful.”

The writ added that the sum secured under the debenture had increased by $394,128 on June 11, 2013, and alleged that after the debenture loan was repaid Orchid Bay was entitled to the return of its real estate and termination of Mr Albury as receiver and manager.

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”.

Mr Gomez is the receiver/manager for the William B. Johnson Investment Company and William B. Johnson entities, which own the outstanding and issued shares in Guana Cay Abaco Development Company. This is the entity that trades as Orchid Bay Marina and Resort.

US bank, Synovus, is the main lender/creditor of those companies’ principal, businessman William B. Johnson, a well-known American entrepreneur who was once the owner of the Ritz-Carlton hotel chain.

Mr Johnson since then has become ill, and run into financial difficulties, owning numerous creditors significant sums.

He is thought to have owned Orchid Bay for some 20 years, and invested considerable sums in installing all the necessary infrastructure.