Fashion Mall at 321 N. University Drive, Plantation (Melanie Bell)
A Boca Raton real estate investment company was the winning bidder Thursday with a $37.7 million offer for the shuttered 33-acre Fashion Mall in Plantation.\
Encore Housing Opportunity Fund’s bid in the bankruptcy auction was about 57 percent higher than the $24 million stalking-horse offer from Palm Beach Gardens-based Ram Realty Services, which set the floor for the auction.
The second highest offer of $37.5 million came from an affiliate of BTI Partners in Fort Lauderdale, which was selected as the backup bidder to close the deal if Encore doesn’t fulfil the purchase agreement.
U.S. Bankruptcy Judge John Olson in Fort Lauderdale will be asked for final approval Friday.
The auction was the latest development in a nearly decades-long venture by Chinese investors to convert the mall site into a $300 million project with a branded hotel, condominium tower, shops, restaurants and top-tier office space.
The plans unraveled after investor Zhen Zeng Du, the head Tangshan Ganglu Iron & Steel, faced off in court with ex-partner Wei Chen to gain control of the property.
In February after Chen started Chapter 7 bankruptcy proceedings for the three companies involved in the redevelopment, Du tried to regain control and block the liquidation sale by converting the bankruptcy to a Chapter 11 case. He argued a sale would cause his company to lose about $162 million it invested in the project.
Olson denied that request, opening the door to the auction. Attorneys said Thursday that Ganglu failed to qualify to participate.
Participants were required to put down a deposit, sign an asset purchase agreement and demonstrate the financial ability to close the transaction. Initial reports indicated Ganglu failed to meet all three criteria.
“We were disappointed that they did not qualify because we wanted their participation,” said Genovese Joblove & Battista attorney Glenn Moses, who represents bankruptcy trustee Kenneth Welt.
Moses said the successful bid would allow the trustee to pay secured and unsecured creditors and leave money to repay investors.
“It was a hard-fought case, and we got an excellent result for the bankruptcy estate,” he said.
“Our first focus was to sell the hard asset,” Welt said. “Now our second priority is looking into claims and litigation from third parties.”
The bankruptcy debts include a $500,000 post-petition loan approved by the court to cover insurance and administrative expenses leading up to the auction. Creditors also filed up to $16 million in claims related to construction of a yet-to-be-completed Class A office building on the site. If vetted, these debts would reduce the amount available to repay investors.
Ganglu attorney Jose Casal of Holland & Knight said Thursday that his client did not authorize him to discuss the case.
If Olson approves the sale, Encore Housing Opportunity Fund plans a major redevelopment.
Senior executive John Kinsey said the company had a long-time interest in the site northwest of Broward Boulevard and University Drive and started to take a close look after bankruptcy proceedings began. It plans to demolish the mall to make room for a live-work-play complex with housing and commercial real estate.
“It will definitely be a very upscale mixed-use product,” Kinsey said. “One thing that’s very important to us is working with the city of Plantation. We understand this is a very important piece of property in the city, and we want to make sure they’re happy and comfortable with what we’re doing.”