Anguilla’s Viceroy Resort Files for Bankruptcy to Facilitate Sale

Anguilla’s Viceroy Resort Files for Bankruptcy to Facilitate Sale

Barnes Bay Development Ltd. filed a Chapter 11 plan in the United States Bankruptcy Court for the District of Delaware to facilitate the sale of the Viceroy Anguilla Resort and Residences in Anguilla. The property is owned by a Starwood Capital Group-controlled affiliate, which holds a $358 million mortgage on Viceroy Anguilla and expects to acquire the resort. Barnes Bay asked the court for the sale to take place in Anguilla in compliance with Anguillan law, which will result in an auction open to any interested bidder.

In court papers, Barnes Bay said it had assets of $530 million and liabilities of $461.9 million on its balance sheet as of Dec. 31, 2010. The resort is located on 35 acres with more than 3,200 feet of beach frontage along the Barnes and Meads Bays and has 166 luxury residences. Starwood Capital will provide debtor-in-possession financing and an additional several million dollars to pay unsecured creditors in the event that it is the successful bidder at the auction, Barnes Bay said in a statement. “The auction, which is subject to court approval, is expected to occur in May and the Chapter 11 plan is expected to be completed within 70 to 90 days,” according to the statement.

According to Barnes Bay and Starwood Capital, the bankruptcy will have no impact on resort operations. The firms will “cooperate to avoid any interruption of service and ensure that the amenities, property maintenance and overall quality of guest experience are not diminished during the process.” Viceroy Hotel Group will continue to manage the resort and guests can “continue to expect the same extraordinary level of service and amenities from Viceroy Anguilla.” The resort’s employees, local vendors and service providers will continue to be paid.

During the past six months, Starwood Capital has invested approximately $12 million to finish construction and operate the property. If Starwood Capital successfully acquires the property at the auction and the bankruptcy plan is confirmed, the firm said it expects to invest additional millions of dollars in the resort later this year.

Additionally, Starwood Capital expects to work with the current buyers to close on the contracts that Barnes Bay signed for the sale of condos and villas and intends to reduce the purchase price of many residences to reflect the fact that almost two years have elapsed since the buyers intended to close. “Approximately $550 million has been invested in this resort,” said a Starwood Capital spokesperson. “No expense was spared and the resort is truly stunning.”