Banyan Cay Resort developer in Chapter 11 following $95M foreclosure judgment (Photos)

In July 2022, the lender filed a foreclosure lawsuit based on a loan that covered the hotel and the golf course as well as a second loan that covered the villas project. Banyan Cay Mezzanine Borrower LLC also filed on February 16 for Chapter 11 protection at the U.S. Bankruptcy Court, West Palm Beach. Joseph A., a Miami-based attorney. Joseph A. Pack is a Miami-based attorney who represents Banyan Cay Mezzanine Borrower. He said that Gatto is the principal owner of these companies. Pack stated that while filing Chapter 11 stops both lenders from closing on Banyan Cay Mezzanine Borrower’s equity interest in real estate companies, it does not stop the foreclosure auction. Pack stated that Pack had made the decision to declare bankruptcy the mezzanine borrower. This stopped the equity interest foreclosure. "We will take any further steps necessary to preserve the equity value of the property owners. Step one was the mezzanine borrower bankruptcy. Banyan Cay Resort Fund also filed a suit in federal court against U.S. Real Estate Credit in a related case. Banyan Cay Resort Fund claims that the senior lender violated the intercreditor agreement. This is a contract between two lenders who are working with the same borrower. According to the intercreditor agreement, the senior lender could not increase the value of its loans for Banyan Cay real property companies without the permission of the mezzanine lender. U.S. Real Estate Credit claims that it increased its loan to the villa developer company by $5M without U.S. Real Estate Credit's approval. James C. Vandermark from New York, who represented Banyan Cay Resort Fund, could not be reached for comment.