For the second time in the past seven years, a bankruptcy has resulted in new ownership at Daufuskie Island’s Melrose Resort.
After a U.S. Bankruptcy Court hearing Wednesday in Charleston, Judge John Waites ordered the ownership group of the roughly 400-acre property — which includes an inn, a golf course, and rental cottages — to turn over the keys to its biggest creditor.
The resort was bought in 2011 by the Utah-based Pelorus Group, whose owner J.T. Bramlette vowed to breathe new life into the property after taking over and renaming the bankrupt Daufuskie Island Resort and Breathe Spa.
That new life never came and the property languished.
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The resort filed for Chapter 11 protection in March and stalled an impending foreclosure sale.
Prior to filing for bankruptcy, the Pelorus Group transferred ownership of the resort to a group of affiliated companies also headquartered in Utah and managed by Bramlette, Pelorus Group president , according to court records.
The resort’s main creditor — Odeon Singapore Limited, an affiliate of Netherlands-based Lex van Hessen Holding BV — invested roughly $27.5 million in the Melrose Resort, court documents show.
Following the finalization of Waites’ ruling — which is expected within the next few weeks — Odeon will be the new owner of the property.
Michael Weaver, an attorney representing Odeon, told the court that the creditor received repeated assurances from the resort’s owners that efforts would be made to improve the property.
Those efforts “always seemed on the horizon, but never materialized,” he said.
Ron Jones, an attorney representing the Utah-based owners, said told the court that currently “the debtor has no operations” nor the cash to maintain the property.
In an attempt to recoup at least a portion Odeon’s investment, the owners tried to sell the property with a minimum starting price of $19 million.
No qualifier bidders emerged by a court-ordered Aug. 23 deadline, leaving handing the resort over to Odeon — which has not announced plans for the resort site — as the only realistic option, attorneys for both the debtor and creditor agreed.
Waites denied Wednesday a last-minute request by a group called the Opportunity Fund to push a ruling back 30 days. Representatives of that group told the court they were working to raise $15 million to take over ownership of the resort.
Waites called the proposal “too, little too late.”
Odeon, an affiliate of Netherlands-based Lex van Hessen Holding BV, simply couldn’t continue to allow the property to deteriorate and lose value, Weaver said.
James Griffin of the Melrose Property Owners Association — which is distinct from the resort and not a party in the bankruptcy case — spoke Wednesday in favor of turning the resort over to new owners.
“We are concerned about the dormancy of the resort,” he said, expressing worries about vandalism and erosion of land around the golf course.
Assistant Beaufort County attorney Christopher Inglese told the court that county and island leaders have similar concerns about the deteriorating conditions at the resort.
“This has reached an urgent level,” he said. “ … We really need an owner we can work with” to help rectify any safety hazards posed by the vacant resort facilities.
In issuing his decision to approve Odeon’s takeover of the resort, Waites said “Time is critical … there just needs to be some conclusion.
The move will “take the property and provide some stability,” he said.