New bid emerges for Sea Island

But Judge John S. Dalis nixed the new bid, saying that if the Starwood-Anschutz partnership wanted to bid on the resort, it will have to do so at an auction scheduled in Atlanta on Oct. 11, according to the report.

In a Friday memo to Sea Island members, Chairman and CEO Bill Jones III said the judge’s decision keeps the resort's Chapter 11 bankruptcy resolution on track.

“We believe this is the right decision to ensure an orderly process and, of course, are fully supportive of a competitive auction that achieves the best outcome for all stakeholders,” Jones wrote.

Attorneys for Sea Island argued Starwood and Anschutz had their chance to buy and lost earlier this summer, and that their higher bid would harm the sales process and the ability of Sea Island Co. to operate, the Brunswick News reported.

Sea Island Co. — parent of The Cloister and Lodge hotels, award winning golf courses and beach club— filed for Chapter 11 protection Aug. 10, culminating a disastrously ill-timed bid to take the resort into the luxury stratosphere just as the real estate bubble burst and recession set in. At the same time, the company announced Oaktree and Avenue had won a lengthy closed-door bid process to acquire the storied resort.

The pairing of Starwood and Anschutz, identified in July by The Atlanta Journal-Constitution as contenders in the Sea Island bidding, came in second during that process with a bid of approximately $196 million. The latest bid was announced in court Thursday.

Starwood is a Connecticut-based buyer of distressed assets. Led by CEO Barry Sternlicht, Starwood and its partners have acquired numerous trophy real estate assets during the financial crisis, including the portfolio of Corus Bank, which included the tony Atlanta condo towers The Atlantic and The Brookwood.

Anschutz is a Los Angeles-based owner of sports venues and sports franchises, including the Los Angeles Kings and Galaxy.

A group of unsecured creditors, or those without collateral to secure what they are owed, backed the Starwood-Anschutz bid. Sea Island owes secured creditors Columbus-based Synovus Financial, Bank of America and Bank of Scottland about $500 million.

Rumors of Starwood and Anschutz’s continued interest has circulated around the Golden Isles for weeks.

A break-up fee of $5.9 million is in place under the deal with Oaktree and Avenue, meaning a bid would have to top $203.4 million to exceed its value including that fee, according to reports.