The inside of the proposed Landmark hotel as it appeared on Monday, March 5.
Minor and Danielson on groundbreaking day in 2008.
file photo by Jay Kuhlmann
Lee Danielson, the man who sparked a downtown Charlottesville renaissance (along with some battles against business partners), was publicly identified Monday as one of the interested bidders for the unfinished Landmark hotel, as the jurist overseeing the bankrupt 11-story structure sent a "stalking horse" off to pasture.
On March 19, federal bankruptcy judge William E. Anderson, who had set a January 15 deadline for the so-called stalking horse, Milwaukee-based hotelier Timothy James Dixon, declined to accept Dixon's day-earlier proposal to pay $3 million for the towering fiasco. Instead, the judge said at the close of the 2.5-hour hearing, that he wants the building's shell and land auctioned— even if that means entertaining live bidders inside his courtroom.
"I want to sell the property," said Anderson, indicating a preference against sealed bids. "I like," the smiling judge explained as he thrust his hand skyward, "to see the competition and the money bouncing up."
The judge was far from alone in urging new money into the construction project, which hasn't seen any action— other than the courtroom variety— for more than three years.
"I want the bleeding to stop," said Richmond-based attorney Craig Young, who represents the unsecured creditors, the ones least likely to see a cent. "I want the legal fees to stop, so there's something to go around."
While Judge Anderson agreed with the sentiment, he declined to immediately give the unsecured creditors what they were seeking: a $200,000 fund that was a key component of the proposal by Dixon, the hand-picked successor to the financially-strapped owner of the project, Halsey Minor.
An oft-successful technology investor and Charlottesville native, Minor has suffered a spate of setbacks that include several creditor lawsuits and the ignominy of getting named, along with wife Shannon, as California's top tax deadbeats, with an unpaid balance of about $14 million.
His financial woes may not have ended, as even the attorney representing his bankrupt company, Minor Family Hotels LLC, in explaining why Dixon should get a "break-up fee," informed the court: "Despite the promises of Halsey Minor to pay him, Mr. Dixon has received zero."
Minor, unreachable for comment after the hearing, has blamed his lender and Danielson for losing the Landmark. This now L.A.-based businessman, a co-founder of Cnet, has initiated steps to sell "Fox Ridge," his Free Union-area farm. That's several months after he filed an "affidavit of indigence."
One man clearly not indigent is Alexander von Furstenberg. The son of wrap-dress inventor Diane, the stepson of media titan Barry Diller, and a billionaire hedge-fund manager in his own right, von Furstenberg allegedly wants to buy the Landmark with Danielson running the show.
"He's a hands-off investor," says Danielson, drawing a contrast with Minor, with whom Danielson sparred over everything from the Landmark's mural to its proposed skybar.
In a post-hearing telephone interview, Danielson says his bid would trump any others because it won't be contingent on bank financing, something that's in short supply these days— particularly at a site where the last bank, Specialty Finance Group, is still owed over $13 million.
Other creditors include general contractor Clancy & Theys, claiming over $2 million, and the city of Charlottesville, owed about $135,000 in back taxes.
At an earler hearing, Dixon touted his $3 million bid as a substantial premium over a recent appraisal valuing the Landmark at just $2.1 million. He said last fall that he'd earn a seven percent fee on the $15-$18 million in new money he estimated it would take to finish the hotel and also take a 10 percent ownership stake upon completion.
On Friday, March 16, two months after deadline and one business day before the more recent hearing, lawyers circulated his proposal, an asset purchase agreement that was not entered into evidence but which allegedly gave him a pre-closing escape hatch.
"Going forward on a stalking horse that can walk away is not the right way," said John Maddock, attorney for Specialty Finance. "The terms of the agreement allow Mr. Dixon to sit back and decide whether he wants to buy the hotel."
Another lawyer went further in attacking Dixon's proposal.
"He owns a hotel. We're not talking about Conrad Hilton here," said the attorney for an unpaid concrete company, Bill Shmidheiser, who also likened Dixon to Dick Cheney, who famously conducted a vice-presidential search and then chose himself as the most qualified.
"There's no money on the table," said an exasperated Shmidheiser. "The debtors had a year and a half."
Although the Minor Family Hotels lawyer then said that Dixon would remove his escape clause and even offered to put Dixon on the stand to testify, nobody, including the judge, expressed eagerness for that to happen.
"You all will have to agree," said the judge, indicating that he'll require a substantial cash deposit and a level playing field. "And then we'll sell the property to the highest bidder."
One interested party mentioned inside the courtroom was Green River Partners, a Maryland-based firm led by Darren Linnartz.
The judge asked the lawyers to get together and come up with, within 60 days, the terms for an auction that would occur by June 18. If they can't, they'll be invited to another hearing, this one in Lynchburg, on April 5.
Although he caught an overnight flight from the west coast, Danielson— who developed the Main Street Arena (as the Charlottesville Ice Park) as well as a nearby mixed-used building and a Regal cinema— was unable to attend the hearing due to fog in Charlotte. But what he heard makes him sound a note of confidence for his chances, and in his billionaire backer.
"It's a good investment," says Danielson. "And he was impressed with what I've done in Charlottesville."