Bidders will have to up the ante if they want to steal away 6.6 acres of prime downtown riverfront property formerly owned by Chattanooga businessman Allen Casey, who docked a barge there with the intention of turning it into a restaurant but it decayed and was towed away last year.
CW Development Company LLC, of Charlotte, N.C., has offered $5.925 million for the vacant land on Manufacturer's Road just west of the One North Shore Condominiums.
But if someone bids at least $265,000 more, they could wrest away the property, under a bid process approved Thursday morning by Judge Shelley D. Rucker in U.S. Bankruptcy Court in downtown Chattanooga.
That includes a $165,000 "breakup fee," requested by Chattanooga bankruptcy attorney Jerrold D. Farinash, the trustee in the case. The breakup fee would help cover the costs that CW Development Company LLC incurred making plans to develop the property. Plus, each competing bid must be at least $100,000 more than the previous bid, which brings the total to $265,000 to beat the $5.925 million offer.
Bidding will start on Sept. 6, under the process approved Thursday, and bankruptcy court will select the winning bidder at a hearing at 10 a.m. on Sept. 9.
It's anyone's guess if other bidders will step forward, since the roughly $898,000 an acre that CW Development Co. offered would put Casey's former waterfront land in the ranks of the most expensive property ever in Chattanooga.
"It's a very hot property, and the market has been blowtorch hot for the last two years," said Ben Pitts, an agent for Herman Walldorf Commercial Real Estate, who was at Thursday's bankruptcy court hearing. "The demand has leveled off. But if the demand levels off at 1,000 degrees, it's still a hot market."
Even though the former Casey property has garnered a $5.925 million bid, and could go higher, it likely won't go high enough to pay back Casey's creditors, attorneys at the hearing said.
"Everyone's taking a big haircut," said Chattanooga attorney Dick Gossett, who, along with Chattanooga attorney Scott LeRoy represents creditors.
Casey, who developed the Chattanooga Choo Choo Hotel complex more than three decades ago, had hoped to make the barge a floating restaurant when he brought it to the city in 2009. But the derelict barge became known as the "eyesore on the North Shore" and was towed away in April 2015 to Biloxi, Miss., where it was due to be scrapped.
Officials at CW Development Company LLC didn't return calls Thursday seeking comment.