Some people may assume that filing for bankruptcy implies that an individual is choosing not to repay his or her debt. This belief may prevent many individuals from seeking bankruptcy protection for fear of being associated with the social stigma. Although filing for bankruptcy protection does imply that an individual’s debt is unmanageable, the individual may have options to restructure his or her debt in order to pay the debt off at a manageable rate.
In March 2010, two investment partnerships that own Sawgrass Marriott Golf Resort & Spa filed for Chapter 11 reorganization in Florida. The partnerships filed Chapter 11 in order to work out a reorganization plan with its lender, Goldman Sachs Mortgage Co. According to the bankruptcy filing, RQB Development LP and RQB Resort LP owe more than $193 million in loans to Goldman Sachs over the Sawgrass Marriot resort in Ponte Vedra Beach, Florida.
So far, the two sides have failed to reach a reorganization agreement regarding the debt, but a bankruptcy judge has appointed a mediator to help the case along. RQB must submit its reorganization plan by June 7. The partnerships believe that mediation will help them reach their deadline.
Although RQB does want to restructure its debt with Goldman Sachs, the two sides have had a difficult time reaching an agreement about the current value of the Sawgrass Marriott resort property. Both agree that the economy has driven down the value of the property. The property originally sold for $220 million in 2006, but a judge ruled in February that the property is only worth $132 million.
In order to restructure the debt, RQB must come up with a plan by June 7 to repay $132 million, and Goldman Sachs must agree to the plan. If Goldman Sachs refuses to accept RQB’s plan, RQB could lose the Sawgrass Marriot resort to foreclosure.
Chapter 11 is typically used in cases involving a large amount of debt and assets, but Florida residents may also benefit from filing Chapter 13. Individuals can choose to restructure their debt under Chapter 13, which may allow them to keep important assets such as their homes and cars.
The Florida Times-Union: “Mediator appointed in Sawgrass Marriott bankruptcy case,” Mark Basch, 9 May 2011