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The Honolulu Advertiser
Posted on: Monday, May 31, 2010

Auction won't affect resort employees, attorney says

Advertiser Staff

Employees of Makena Resort and its 310-room Makena Beach & Golf Resort will not be affected by the outcome of a foreclosure auction won Friday by the original lenders, their Honolulu attorney told the Maui News.

"I want to be clear," attorney Barry Sullivan said after the auction held near the steps of the Wailuku courthouse. "It will be business as usual."

The group of mortgage securities holders who have a $200 million lien against the 1,800-acre Makena Resort came out on top in a two-bidder foreclosure auction. The auction win protected their investment until a new property owner can be found, Sullivan said.

The top bid was $55 million by Wells Fargo Bank, which is the lenders' trustee, in what is believed to be the largest foreclosure in Maui history.

The mortgage holders won in a "credit bid," or paying for the title with what's owed them, Sullivan said. If they'd let Makena Resort slip away for any less than $200 million, the lenders would have lost money.

Now, they can either resell the property once the title clears the courts and the real estate market improves or they can try to get most of their $200 million back at the upcoming confirmation hearing.

"That's where the action will really be," Sullivan said of the hearing to be held sometime in the next 45 days.