This article incorrectly reported that Miami attorney Jorge Perez was removed as receiver. In accordance with a U.S. Bankruptcy Court order, he voluntarily turned over the estate’s assets to a bankruptcy chief restructuring officer. The story has been changed to reflect these changes.
Bal Harbour’s most financially embattled mixed-use tower project appears closer to exiting its latest bankruptcy drama, as a lawyer who shepherded the building through a part of recent receivership has agreed to slash legal fees by a third.
Attorney Jorge J. Perez and his team from the Miami office of McDonald Hopkins had previously sought $2.8 million for their work managing the condo-hotel venture One Bal Harbour. Perez was appointed receiver by a Miami-Dade circuit judge in 2011 after the project’s then-owner, Elcom Hotel & Spa, was accused of fraud and mismanagement in state court.
After the venture filed for chapter 11 bankruptcy protection in January 2013, a Miami bankruptcy judge ordered the turn over of assets to a restructuring officer. At the court’s direction, Perez turned over the assets.
In a statement Friday, McDonald Hopkins said it had agreed to reduce its fees to approximately $1.95 million. Of that amount, $400,000 will be paid to McDonald Hopkins once all other creditors are paid, the statement said. The firm had previously applied a 9 percent discount to its fees.
McDonald Hopkins managing member Raquel A. Rodriguez said in the statement that her firm believed “the fees and expenses as [originally] submitted appropriately reflect the complexity and scope of the matter we have been dealing with.”
“Nevertheless, we are pleased to have reached a settlement that will facilitate a successful outcome,” she added.
A rift that opened between creditors and former receiver Perez was one of the many legal battles fought over One Bal Harbour during the latest bankruptcy process that building has been exposed to. The homeowner’s association, which recently bought the tower for $13.4 million, had been battling both former owner Elcom and receiver Perez over who would handle the building’s receivership once Elcom filed for bankruptcy in January.
A brief filed on behalf of that group asked U.S. Bankruptcy Judge Robert Mark to remove Perez from his position, claiming Perez had “mismanaged One Bal Harbour” and shown “horrible judgment” in dealing with the venture’s finances.
The condo association had objected to the fees sought by McDonald Hopkins before the assets were turned over to the restructuring advisor and objected to paying them outright after he was replaced by Atlanta-based Algon Group earlier this year.
In an April 12 filing on behalf of the association, lawyer Charles M. Tatelbaum, a partner at Hinshaw & Culbertson in Miami, wrote that Perez “and his law firm systematically exploited their appointment as fiduciaries by the state court as a bottomless trough to enable a feeding frenzy to line the pockets of those involved.”
A review of the billing records by the DBR in April showed McDonald Hopkins billed hourly rates of $450 for four partners from offices in Miami and West Palm Beach and three from the Cleveland office. The lowest billing paralegal charged $175.
Back then, McDonald Hopkins partner Shawn Riley in Cleveland defended the work performed by Perez and the law firm.
“Perez took over a very difficult situation and did what we think is a very good job of stabilizing the situation and utilizing lawyers in particular areas. A project of that size takes a lot of time for somebody to come in and stabilize the situation,” he told the Daily Business Review.
Friday, Perez’s colleagues went even further.
“In the end, the groundwork Jorge and his team laid has continued largely unchanged and led the property to its current position,” said Rodriguez, the Miami managing member, in reference to the recent sale to the homeowner’s association.
The current bankruptcy process is the second One Bal Harbour has been involved in. The tower’s original developer, Bonita Springs-based WCI Communities, went into bankruptcy a few months after One Bal Harbour opened. It would end up selling the tower’s common area and hotel component, as well as 51 units, to Elcom. The tower is still mired in other legal battles, including one accusing the project’s general contractors of shoddy construction that’s led to flooding problems of the building’s infrastructure floors.