Bankruptcy Trustee Dillworth Files another Lawsuit against Ginn
This time, Ginn is accused of unjust enrichment in a transaction involving the purchase of Wetland Mitigation Bank Credits to satisfy obligations associated with further development of Quail West
Palm Coast, FL – September 21, 2010 – Bankruptcy Trustee Drew Dillworth represents creditors in the combined Chapter 7 Bankruptcy of two Ginn-developed luxury golf course communities in south Florida; Tesoro and Quail West. Last Friday Dillworth filed another lawsuit to recover assets on behalf of creditors in the bankruptcy; this time against real estate developer Ginn Development Company. Dillworth has also sued Ginn and financial partner Lubert-Adler to recover millions the defendants are alleged to have fraudulently transferred from the proceeds of a $675M Credit Suisse loan. That lawsuit is progressing.
Ginn and Lubert-Adler set up separate legal entities for each large project to insulate one projects success from another potential failure. When they purchased Quail West, near Naples, they begot Quail West Ltd. LLLP which subsequently became a debtor in the Chapter 7 Bankruptcy. At the time of the purchase, Ginn purchased $408,000 for Wetland Mitigation Credits. [Mitigation credits are purchased from Mitigation Banks to offset potential loss of wetlands within a development. They have value and can be bought or sold.] They were needed to satisfy potential obligations imposed by the U.S. Army Corp of Engineers and the South Florida Water Management District associated with future development of the Quail West property.
Although Quail West Ltd. paid the full purchase price ($408,000), Robert Masters executed the Agreement on behalf of Ginn Co. At that time, Mr. Masters was also the Manager of Ginn-Quail West GP, LLC which was the General Partner of the Debtor. Dillworth alleges that Ginn Co. dominated and controlled Quail West Ltd., causing it to pay for the Mitigation Credits.
The Mitigation Credits were not listed as assets on Schedule B of the Quail West’s debtor schedules. Upon discovery, Dillworth made a demand upon Ginn Co. to turn over any interest it has in the Mitigation Credits. Ginn refused. Thus the lawsuit in which Dillworth alleges "unjust enrichment." The Mitigation Credits are valuable assets Trustee Dillworth can liquidate for the benefit of Quail West creditors.
credits
Were the credits used for the a permit? If so, the permittee utilized the value of these credits and the value resides in the permit. Perhaps they were holding them for future development, which most would rightfully question since there will be no more development-at least by this developer.