Two rulings issued in November say investors in the dormant Bama Bayou project on the Intracoastal Waterway in Orange Beach must pay millions of dollars to several banks holding mortgages on defaulted loans.
Mobile County Circuit Court Judge Jill Parrish Phillips handed down the rulings on loans of $6 million, dated March 2005, which were made to jumpstart the mixed-used development. Another $5 million loan was made again in 2006, followed by a third loan in March 2007, followed up by a fourth loan of $3.9 million taken out by developers on the projects.
More appeals are expected in the case, which, as of Jan. 14, has been in court for 12 years.
On the first loan to Bama Bayou, the judge ruled investors must pay back a total of more than about $28 million — $20.4 million in principal and the rest in interest — according to court documents.
“Each Bama Bayou guarantor is jointly and severally liable with Bama Bayou and [every] other Bama Bayou guarantor up to the specified principal amount owed by the Bama Bayou guarantor under each note,” the judge’s motion judgment reads.
According to court documents, after agreeing on initial investments in Bama Bayou, the investors then signed guarantees saying that if Bama Bayou didn’t repay the loans, they would. The amounts listed in the ruling range from $14.5 million judgments against the Mitchell Company and Gulf World LLC. There are 11 guarantors who were ordered to pay $6.1 million each, among them Gulf Shores City Councilman Jason Dyken.
If each guarantor paid what the motion calls for, it would add up to about $174 million. The plaintiff, officials close to the case said, can collect what it can from the investors up to the $28 million total and no more. It was previously ruled the guarantors are liable for interest from the time of the loans through August 2013.
Other investors ordered to pay in the motion judgment are Frances Saint, Chester Stefan, Donald P. Kelly Jr., Scott and Sue Raley, James Branyon, Tammy Center, George Braswell, Lester L. and Diane Boihem, Carol J. and Stacey Castille, Sara Rebecca Bain, Paul and Wendy Callicoat, A.B. and Debra Harrison, Stephen C. and Jennifer Lawler and Belinda Trammell.
The primary lender for the project, the now-defunct Vision Bank, said the original investors defaulted on the original loans and it foreclosed on the loans in 2009. Vision then bought the property for $10.3 million in an ensuing auction. Bama Bayou investors contended that Vision didn’t follow through with all the financial support it promised and that’s why the project faltered. SE Property Holdings is now the lead plaintiff in the case since Vision’s demise.
In September 2018 an investment group out of Texas, Presidium, announced it would like to take over and revive the failed project and even got a tax abatement for about $32.5 million from the city of Orange Beach. But the group failed to secure the bond money to purchase the property, so that effort has fallen apart too.
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