Caribbean Resort Ordered into Mediation with Lenders
Scrub Island Resort, located in the British Virgin Islands and operated since 2010, has been ordered into mandatory mediation sessions with their primary lender, FirstBank Puerto Rico over their filed restructuring proposal involving nearly $120 million in claims. FirstBank Puerto Rico rejected Scrub Island Resort’s characterization of much of the debt, and United States Bankruptcy Judge Michael Williamson ordered both parties into mediation to take place in Tampa, Florida.
The resort’s debts are not secured by collateral, and the other creditor involved will be represented by a group of trustees also involved in the mediation.
Scrub Island Resort’s proposed settlement would have given FirstBank Puerto Rico a claim of $37.5 million on the newly restructured company, and then receive an immediate cash payment of $7.5 million. The remaining $30 million would be paid back over a five-year period. FirstBank would also receive $84.9 million in unsecured deficiencies which would carry no recovery. FirstBank rejected this plan as insufficient.
The bankruptcy has been complicated by a dual jurisdiction split between bankruptcy court based in Tampa representing the Puerto Rican interests and commercial court in the British Virgin Islands. The ordered mediation is an attempt to settle the outstanding issues between parties without any further litigation, and any settlement reached would be recognized in the British Virgin Islands as well.