FOR IMMEDIATE RELEASE:
Miami Gardens HOA Emerges from Bankruptcy Protection as U.S. Bankruptcy Court Approves Reorganization Plan
Plan Satisfies All Creditor Obligations, Provides 100% Distributions to Creditors, Concludes Bankruptcy after Five Years
MIAMI (July 21, 2017) – Chapter 11 Bankruptcy Trustee, Barry Mukamal of KapilaMukamal and his restructuring counsel Glenn D. Moses of Genovese Joblove & Battista, P.A, are pleased to announce that the United States Bankruptcy Court for the Southern District of Florida has approved the plan of reorganization for Majorca Isles Master Association, a homeowners association created by developer D.R. Horton as part of a planned 681-unit community called Majorca Isles, located in Miami Gardens, FL. The reorganization plan calls for a 100 percent distribution to all creditors and concludes the chapter 11 process after five years in bankruptcy.
“We are very proud of this result which benefits homeowners and creditors,” said Moses, a shareholder with Genovese Joblove & Battista, P.A. “Under the plan approved by the Court, the Trustee will pay all creditors with interest and will turn over control of the Master association to a new Board of Directors with significant operational funds and reserves.”
The Majorca Isles Master Association filed for bankruptcy in 2012, shortly after it was turned over by the developer, D.R. Horton, Inc., the largest residential developer in the U.S. At that time, Majorca was in dire financial condition with little cash and no system for collecting association fees. In fact, the association had a roughly $20,000 monthly deficit and was unable to cover basic community repairs and maintenance.
In an effort to turn around the Master Association, the Trustee and his team had to recreate seven years of unit owner and unit specific financial records from scratch (approximately 1,000 pages) because of the condition and non-existence of records left by the D.R. Horton’s appointed Board, and establish a plan for reorganization. With the recreated records, the Trustee was able to determine the extent of the collection deficiency and undertake a collection program, conduct an analysis of unpaid assessments, negotiate settlements with unit owners, and manage outside counsel.
While ensuring critical expenses were paid, the Chapter 11 Trustee doubled the amount of collections so that the Master Association was able to sustain itself on a bare bones budget. Throughout the five year process, the Chapter 11 Trustee also performed ongoing accounting functions and engaged in litigation support to determine the stripping of budgets and uncover the facts relating to alleged deceptive accounting.
In January of 2014, the Trustee filed a lawsuit against D.R. Horton for damages it caused Majorca. In October 2016, Mukamal and his trial attorney John Arrastia of Genovese Joblove & Battista, P.A, secured a $16.3 million judgment against the developer and its employees for violating Florida’s Deceptive and Unfair Trade Practices Act by deceiving homeowners and creating false association budgets and financial statements that inflated the assets to make the Master Association look solvent, even though it did not have enough money to pay its bills. D.R. Horton later appealed the judgment and the parties ultimately reached an $11 million settlement, paving the way for the full distribution to creditors, establishing a several million dollar fund for the rehabilitation of the Majorca Isles community, and providing relief to homeowners, many of whom are low to moderate income families.
“The Majorca Isles community has been suffering since 2011. The reorganization brings five years of hard fought litigation and administration full circle. With all creditor obligations fulfilled, and the necessary reserves in place, the new Board now has the resources it needs to physically restore the community and ensure the future viability of the Majorca Isles Master Association,” said Trustee Barry Mukamal, CPA, Co-Managing Partner at KapilaMukamal.
D.R. Horton, a New York Stock Exchange company, began construction on Majorca Isles in 2005 with plans to build 681 condominium units and single family homes in Miami Gardens. The project was to include two swimming pools, two clubhouses, as well as security. D.R. Horton halted construction during the recession as sales slowed and withdrew the remaining portion of the project. Ultimately, 340 condominium units were constructed in 2009 and 355 units were sold for an average of about $300,000.
About Genovese Joblove & Battista
Genovese Joblove & Battista, P.A. (GJB) was established in 1999 by founding partners John H. Genovese, Michael D. Joblove, and Paul J. Battista. Today, GJB has grown steadily to become a major regional firm with offices in Miami and Fort Lauderdale and an affiliate office in Caracas, serving clients throughout the U.S. GJB attorneys are recognized for their experience representing clients in large and complex litigation in a number of areas, including bankruptcy, insolvency, receiverships, franchises, and general commercial matters, as well as white collar, real estate, employment law, class actions, and securities litigation. The firm and its affiliate, GJB Consulting, also counsel clients in local, state and federal government matters. For more information, visit www.gjb-law.com
KapilaMukamal, LLP provides fiduciary and insolvency services including restructuring, forensic & investigative consulting, litigation support services, expert witness testimony, business valuations and matrimonial forensics. The firm has two locations in South Florida in the SunTrust International Center, One SE 3rd Avenue, Suite 2150 in Miami and 1000 South Federal Highway, Suite 200 in Fort Lauderdale. For more information, visit www.KapilaMukamal.com.