Sharif El-Gamal and his investors are personally in debt of $86 million to stave off foreclosures, the project’s lenders say.
Lenders Arden Group and Corten Real Estate Partners claim that El-Gamal and its partners, Andrew and Stephen “Chip” Weiss of Flintlock Construction Services, declared bankruptcy on Sunday for their stake in the hotel and that they are personally liable for the hotel’s mezzanine debt. In litigation.
Developers typically protect themselves by limiting lenders’ claims against project assets in the event of a default. But many loans include “bad boy guarantees,” which hold developers personally liable if they do certain things, such as bankrupting a project.
“The bond expressly states that if the borrower or mortgage borrower files for bankruptcy (among other things), the guarantor is personally, jointly and severally liable for the entire amount owed on the loan,” the complaint reads.
Representatives for El-Jamal and the Weiss brothers did not immediately respond to requests for comment. PincusCo first reported news of the lawsuit.
The lawsuit comes after the UCC foreclosure auction scheduled for Monday for the Margaritaville hotel was postponed.
El-Gamal had tried to delay the sale by asking a judge to issue a temporary restraining order, arguing that the marketing process was unfair and that the lenders were trying to scare off potential bidders. However, the judge declined to stay the proceedings.
The auction has been rescheduled for July 24, but may not take place until the bankruptcy case is resolved.