U.S. Bankruptcy Judge Paul Glenn Tuesday confirmed a Chapter 11 reorganization plan for the Sawgrass Marriott Golf Resort & Spa, clearing the way for the Ponte Vedra Beach resort to be turned over to its major lender, Goldman Sachs Mortgage Co.
The two Irish investment partnerships that own the 26-acre property, RQB Resort LP and RQB Development LP, filed the reorganization plan in August that called for Goldman Sachs to take over.
RQB had been hoping to find new investors to help it repay the mortgage and keep the property but said in court filings that the price tag was too high to attract new capital.
Goldman Sachs has not said anything about its plans for the resort and its attorney in the case, John Hutton, would not comment after Tuesday’s confirmation hearing.
The reorganization plan does say that Goldman Sachs agreed to continue the hotel’s affiliation with Marriott.
Goldman Sachs is expected to formally take control of the Sawgrass Marriott by the end of November.
According to the reorganization plan, the Sawgrass Marriott is the largest convention and resort facility between Atlanta and Orlando.
The resort includes a hotel with 348 guest rooms and three restaurants, golf villas with another 160 rooms and a beach club with three restaurants.
The resort also offers guests access to several neighboring golf courses, including exclusive access to the The Players Stadium Course at TPC Sawgrass.
RQB filed to reorganize its debts under Chapter 11 of the U.S. Bankruptcy Code in March 2010. The Irish group bought the Sawgrass Marriott for $220 million in 2006 and still owed $193 million on the mortgage from Goldman Sachs when it filed for bankruptcy.
RQB said in its reorganization plan that the recession caused the resort’s revenue to drop by more than 25 percent in 2009, and it tried to negotiate a restructuring of the loan with Goldman Sachs.
When they couldn’t agree, Goldman Sachs filed to foreclose on the property in early 2010 and RQB then filed for bankruptcy.
After filing for Chapter 11, RQB and Goldman Sachs haggled for months over the current value of the resort. Both parties agreed that the recession had lowered the value, but RQB’s appraisers assessed the value at $88.9 million and Goldman Sachs’ appraisers pegged it at $132 million.
Glenn in January ruled in favor of Goldman Sachs, so RQB needed to come up with a plan to repay $132 million to Goldman Sachs in order to keep the resort.
RQB tried to find new investors to help it repay the loan but said in the reorganization plan that the $132 million price proved to be too much.
With a deadline approaching to file a plan, it resigned itself to turning over the property to Goldman Sachs.
Although the case dragged on for more than a year and a half, Glenn indicated at the end of Tuesday’s hearing that he was pleased with how the Chapter 11 case was worked out.
“I really appreciate the lawyering that has been done here,” he said.
He also praised the work of David O’Halloran, president of the two RQB entities, for the way he managed the Sawgrass Marriott as it went through the bankruptcy process. Hotel officials have said it has been business as usual at the resort throughout the case.
O’Halloran would not comment after Tuesday’s hearing.
“We’re glad to get the plan confirmed,” said Stephen Busey, RQB’s Jacksonville attorney. He said he could not comment further.