From Josh McCann at the Island Packet

Daufuskie Island resort parceled off to creditors By JOSH McCANN jmccann@islandpacket.com 843-706-8145 Published Monday, March 28, 2011 Bankruptcy judge says Daufuskie resort can be sold in parcels, Nov. 10, 2010 The Daufuskie Island Resort & Breathe Spa is being broken up after more than two years in bankruptcy. Two secured creditors on Friday each took back a chunk of the resort's assets, splitting what was once a major employer on the sparsely developed island. A judge had authorized the creditors' moves late last year, but the trustee overseeing the bankruptcy had continued to try to sell the entire resort to a single buyer until the creditors' deals closed. "Despite every best effort and two years of very hard work during extremely difficult economic times, a single qualified purchaser simply did not materialize," said Tobin Spirer, a spokesman for trustee Robert C. Onorato. Onorato and associates provided information to almost 400 prospective purchasers, Spirer said. He said scores of those prospects toured Daufuskie, which is accessible only by water and is off the southern tip of Hilton Head Island. AFG, a Denver private investment group that loaned money to the resort before the bankruptcy, received the resort's inn, conference center, Melrose golf course, clubhouse, tennis courts, equestrian center, employee housing and several undeveloped parcels, Spirer said. AFG officials could not be reached for comment Monday afternoon. Bank of North Carolina -- the successor to Beach First National Bank, which loaned money to the resort before the bank failed in April -- received the beach club, eight cottages and several undeveloped parcels, Spirer said. Bank officials said they are fielding offers for those assets but don't expect to sell soon. "We can hold it for as long as it takes to maximize the value," market president Tommy Bouchette said. He said the bank would consider investing in the property to make it more attractive. The bank also would consider selling its property in conjunction with AFG's, he said. Onorato will retain the Bloody Point golf course, land for a marina at Melrose Landing and several undeveloped parcels on behalf of the resort's estate. He will try to sell those assets to pay back remaining creditors as soon as possible and hopes to receive about $4 million for them, Spirer said. That won't go far toward satisfying about $90 million in claims creditors have submitted. Ronald Jones, a Charleston attorney representing the resort's unsecured creditors, said that amount would be disappointing but better than nothing. "You're never pleased to have that small of a dividend," he said. "At least there is some." Russ Brown, a Daufuskie developer and broker who worked with Onorato during the bankruptcy, thinks breaking up the resort could begin "a new and much brighter chapter" for the island. Brown expects the secured creditors to protect and improve their property by, for example, better maintaining the Melrose course and cleaning the inn, he wrote Friday in a message to members of a fractional-ownership club on Daufuskie. "I look forward to experiencing together the rebirth of this unique and special place," Brown wrote.