Financial problems that on Thursday drove the Kona Kai Club and Resort on Shelter Island to seek Chapter 11 protection in U.S. Bankruptcy Court were linked to the collapse of Australian businessman Alan Bond’s highly leveraged business empire, hotel industry sources said Friday.
The bankruptcy filing late Thursday afternoon in San Diego forced the cancellation of a trustee sale that had been scheduled for 9 a.m. Friday, according to William de Leeuw, who holds a $4.8-million second trust deed on the property. First Interstate Bank, which is owed more than $23 million by Bond, had already filed a notice of default on its loan to the struggling Australian businessman.
Although Bond’s business empire is suffering financial problems, one hotel industry source maintained that the Kona Kai could generate a profit under a different operator.
“The main problem is that, while this property could easily support its debt, Bond has had problems overseas that left him unable to cope,” the source said.
The bankruptcy filing came as Bond was evidently trying to complete a sale of the property to a Japanese businessman.
The hotel and marina on San Diego Bay are expected to play a major role as a host for sailing syndicates that will be in San Diego for the America’s Cup yachting race in 1992. Bond acquired a 75% interest in the Shelter Island property in 1989. He acquired the remaining 25% share earlier this year from De Leeuw.