- April 25, 2024
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The lease for Palm Coast’s offices at City Marketplace, expires Oct. 31, according to the city attorney.
City Marketplace, which houses Palm Coast’s City Hall, has entered the bankruptcy process, according to documents filed Aug. 9 with the U.S. Bankruptcy Court.
Asnaco LLC, the debtor for City Marketplace, filed for Chapter 7 bankruptcy. Chapter 7 governs the process of liquidation of assets under federal law.
The Palm Coast City Council, at its Oct. 18 regular meeting, was briefed by City Attorney Bill Reischmann on the latest developments.
In 2009, BB&T, the mortgage company, initiated the foreclosure process when Asnaco LLC filed for Chapter 11 bankruptcy. According to a Sept. 9, 2011 document, BB&T entered a final summary judgment of foreclosure Oct. 5, 2010, in the amount of $12.9 million.
However, Asnaco LLC took legal steps to delay that process, Reischmann said Tuesday.
That’s when Chapter 11 was filed, beginning the reorganization process of a company.
But the court dismissed the Chapter 11 filing. Then, Chapter 7 was filed Aug. 9, and was signed by Bahgwan Asnani, the majority owner.
A receiver was appointed to work with city staff to renegotiate a lease. The current lease the city has expires Oct. 31. However, the receiver’s legal power to negotiate was rescinded, and all of the property of Asnaco LLC is under the exclusive jurisdiction of the bankruptcy court.
Now, the trustee, which is appointed by the federal government, is seeking permission to sell City Marketplace. If the motion is granted at a Nov. 9 hearing, the court will dismiss Asnaco’s appeal and sell the property.
“At that sale, it is anticipated that BB&T will be the successful bidder,” Reischmann said. He added that city staff has already spoken with BB&T representatives.
“As you might expect, they feel that the city is an incredibly important tenant,” Reischmann said. “There are no intentions that BB&T would reject the lease.”
City Council member Bill Lewis questioned whether BB&T would eventually sell City Marketplace once it took ownership. Reischmann said even if that is the case, it would be in BB&T’s best interest to renegotiate with the city.
“The incentive will be for BB&T to negotiate with the city prior to putting it on the market,” he said. “They will have a business incentive to wrap up the lease with the city and have that in hand before going to buyers.”
Reischmann also said it would be wise for the city to make its monthly rent payments to an escrow account. That would minimize the risk of accidentally paying rent twice.
Attempts to reach Bahgwan Asnani via phone and email Tuesday were unsuccessful.
