The owner of an unfinished hotel-condominium won its push to stop wealthy developer Glenn Straub from reserving most or all the proceeds from the Palm Beach property’s sale in a bankruptcy auction, Law.com reported. After filing for chapter 11 protection last August, the Palm House Hotel’s owner, 160 Royal Palm LLC, asked to auction the salmon-colored, 82,648-square-foot building at the center of civil and criminal allegations of EB-5 investment visa fraud. Straub’s KK-PB Financial LLC argued it has a $39 million secured interest in the property where the stalking-horse auction bid is set at $32 million. The two sides have been fighting about KK-PB’s ability to credit bid in the auction tied to its secured interest, which could severely limit the cash proceeds available for distribution to others. U.S. Bankruptcy Judge Erik Kimball in West Palm Beach ruled from the bench on Friday that KK-PB can’t credit bid any amount in the auction. KK-PB Financial maintains 160 Royal Palm defaulted on its mortgage and asked the court to set how much it could credit bid on the development.
