Displeased with the way a community bidder was locked out of the process and concerned about the fate of the historic treasure and its animals, a federal bankruptcy judge in Delaware this afternoon refused to approve the $7.1 million sale of the Marineland Dolphin Adventure property to a developer and ordered the debtors’ attorney to have discussions with the lower bidder.
“There’s the possibility that this auction will be reopened, so the debtor ought to decide how to come back to me and what it ought to do in the meantime,” Bankruptcy Judge Laurie Selber Silverstein said, “because on this record, I’m not going to approve the sale. Maybe another record. But not on this record.” The judge set a Nov. 3 hearing to reconsider the matter.
It was a stunning development, reopening the door to Jack Kassewitz, a dolphin specialist who’s teamed up with former Marineland Dolphin Adventure Felicia Cook and private donors to attempt a $4 million bid on the property. He aims to keep the oceanarium operating. He appeared in federal court in Delaware by zoom today in what was supposed to be a hearing to approve the sale, along with the sale of another property in Panama City.
“We believe we’re the only ones that can save this facility, this national historic monument, and save this and continue the dolphins’ home,” Kassewitz told the judge. “Some of these dolphins were born there. We have three generations in terms of some of these dolphins, and I’m just appealing to the court to give us a chance.”
Cook was also on zoom, as were an entity referred to as “the Rubels,” whom Kassewitz identified as “the people who are willing to help us save this.” He had not previously identified his financial backers. Neither Cook nor the backers addressed the court. Their representative, Michael Joyce, did, representing an entity he identified as Apex Associates, formed to bid on Marineland on Kassewitz’s behalf. No such entity is registered in Florida, according to the Division of Corporations.
“What I really hear in these objections is that this coalition believes they were closed out of the auction, and so I think they’d really like me to reopen the auction,” Silverstein said. “The question is whether I should do that, and I think the coalition needs to understand that the current high bid is in the $7 million range. The debtor ought to consider whether to reopen the auction and work with this group to see if there’s anything that can be done, and then I would hear the evidence about the highest and best.”
Allison Mielke, the attorney representing the debtors, was repeatedly dismissive of Kassewitz’s bid, which caused sharp disagreements and rebuffs from the judge.
Mielke argued that Kassewitz’s group does not have standing to contest the sale. “They have a generalized interest in animal welfare,” she said. “We have a sale in hand. There are developers that are the buyers for these locations, and we are anticipating transferring dolphins.” Texas-based Craig Cavileer’s Delightful Development bid $7.1 million, outbidding St. Augustine’s Hutson Properties’ stalking-horse bid of $3.5 million.
“So I don’t think there’s any contested factual issue,” Mielke said.
The judge flatly disagreed. “I think the issues are surrounding the auction and who was permitted to be at the auction, and how the auction took place and how it went forward,” the judge said. “ I think there are issues.”
Mielke claimed “there was no bid that was submitted by these parties.” That’s not entirely accurate. The $4 million bid missed a deadline. The debtors themselves, whom Mielke represents, did not accept the bid. “We could have allowed the bid if we had thought that it was qualified,” she said. “It is not a qualified bid and those bidders are not permitted to attend the auction.”
Again, the judge disagreed. She was not pleased with the documents she’d been presented. “There was nothing in front of me in these motions that told me, for example, that the property in St Augustine is the Seaquarium,” Silverstein said, “that it has in it a scientific research aspect. Is it operating? Is it not operating?” (It is operating, with a staff of 35 and 17 dolphins and 1,200 other marine species.)
“What is happening with all of the animals in that facility?” the judge continued, admonishing the attorney. “Is there a group that’s interested in trying to save it, as opposed to another facility that’s closed down, is not operating, there are no animals. That’s a pure real estate deal. Maybe this one isn’t. So I got nothing of that. I knew nothing of that, until I read the objections. So in the future, when you come to me with the sale of properties, I want to know about them. I want to understand what they are, the debtor’s efforts with respect to them, so I can understand the picture of what is happening.”
The hearing was the most revealing occasion about the internal operations of Marineland Dolphin Adventures since the bankruptcy was filed earlier this year. Marineland wants to transfer three of its 17 dolphins to Theater of the Sea, a dolphin-tourism attraction in Islamorada. (Marineland is one of four facilities owned by Marineland’s parent company, Leisure Investment Holdings, itself owned by The Dolphin Company in Mexico.)
It isn’t clear what will happen to the animals in Maineland if a party willing to continue operating the facility doesn’t take over. Mielke provided a circuitous and jargon-ridden explanation: there is “a built-in structure order to allow for a post-close transition period of 90 days for transfer of the animals. And we are–that process is well underway. So you will hear… that the debtors believe that that is patently reasonable and doable under the circumstances.” The judge preferred English.
“Is this facility open?” the judge asked.
“It is,” Mielke said.
“Is it cash-flow positive?”
“It is neutral, at best.”
“It isn’t losing money,” the judge said, more as an affirmation than a question.
“Well, for now, that is the case, your honor, I believe,” the attorney said (onthly business reports showing the facility eking out a small profit), quickly adding that it’s still “a huge cash burn on the estates, and the longer that these operate and continue to operate, the longer the Chapter 11 cases have to proceed, and the more expensive it is, and it’s extremely expensive, the run rate.”
“OK, I have none of that,” the judge said, “in any evidentiary form.”
The judge was willing to consider a different sale slated for today, for the shuttered Gulf World Marine Park facility in Panama City. The Crotty Company put a $4.55 million bid for that property on Oct. 14. There were no objections to that sale. The judge approved it.
Returning to the Marineland matter, the judge told Mielke that she had not made the case to exclude Kassewitz’s group. Mielke is to make that case on Nov. 3. The judge wants to know, in Silverstein’s words, “what consideration was given to a group that would like to preserve the current state that was there, of the necessity to go forward on this timeline with the sale. I need to understand that, because this is a unique facility, at least as I understand from the objections, and I didn’t get any of that from what the debtors put in front of me. And this isn’t just a real estate play. It seemed almost cookie-cutter, and this isn’t cookie-cutter.”
“I hear you and what I’m hearing you say is you’d like us to come back at another time and supplement the record,” the attorney said. Then she repeated that “we don’t have a qualified bid” other than the one bid obtained “after 34 rounds of bidding.” Mielke was trying to placate the judge, saying Silverstein wanted “a better record.” But that was not all Silverstein wanted.
“I don’t know whether they can come up with more money or not,” the judge said. “This is not just highest and best, right? You know, I can look at what’s best overall,” suggesting that the highest bid is not necessarily the controlling bid, especially in this circumstance. The Kassewitz group came up with its financing rapidly. She hinted that with time, it could cobble together a higher bid.
“I guess I’m trying to figure out how real this possibility is,” the judge asked Kassewitz, who summarized his business plan. “We’re convinced that we can make the model work, partly because Felicia Cook, who’s a former manager, knows how it works,” Kassewitz said. “In 2023 she showed a very good profit for Marineland. We believe we can do that also.” He told the judge his group was “shut out” of the bidding and pointed her to the document outlining the issue.
Mielke said the Kassewitz proposal is problematic–that Kassewitz’s wife, she said, is a shareholder of the parent company and “has potential prior relationships with prior equity holders and former management and all kinds of other things that we will certainly present to you at the appropriate time.” (Kassewitz, in a brief interview, said his wife had been a founding partner of The Dolphin Company in Mexico–the Marineland parent–but that the couple had not received a dime in dividends in 10 years, and had lost their Miami home over it.)
“I would consider the debtors to consider all their options between now and then,” Silverstein said, “and that hearing could turn into a status conference if the debtors so desire, it could turn into some other request if the debtors so desire.”
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