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Friday, September 12, 2008

Daytona's Bray and Gillespie Files Bankruptcy

Bray and Gillespie file for BankruptcyDAYTONA BEACH - The largest hotel management group in Daytona Beach, Bray and Gillespie, filed for Chapter 11 bankruptcy Friday morning in U.S. District Court at Jacksonville. The company operates 24 hotels in the Daytona Beach area, mostly along the beach front

Bray and Gillespie, Inc. doing business as Ocean Waters Development Inc., petitioned the court for Chapter 11 relief. Chapter 11 Bankruptcy procedures allows a debtor to stop paying its debts while reorganizing. The bankruptcy filing affects 79 affiliated properties and includes over $415 million in debt, with New York law firm Anderson Kill & Olick alone owed about $2 million.

According to Volusia County records, several mortgage holders have also separately begun foreclosure proceedings against the partners, including the creditor that financed Ocean Waters' headquarters building at Atlantic Avenue and Oak Ridge Boulevard.

Bray and Gillespie are also one of the largest real estate developers in the area and have undertaken a number of condominium projects in recent years. They have often been recipients of Daytona Beach City Government largesse thanks to their vast influence with the city's public officials.

Bray and Gillespie are some of the largest campaign financers in Daytona Beach politics, an investment that has paid handsomely in the past with very generous zoning designations not normally available to other developers. These zoning grants were instrumental in B&G's success and gave them hundreds of millions of dollars in profits in past years, often by flipping these properties without even breaking ground.

The sharp decay of Daytona Beach as a viable destination for business or tourism was compounded by the current economic recession and contributed to the failure of the company, once though to be indestructible.

Since 1988, Daytona Beach-based Bray & Gillespie had been involved in more than 100 individual hotel transactions. Their holdings include almost a mile of oceanfront property in Daytona Beach.

Reading from their own 2005 press release we catch a gleam of their flipping strategy:

Traditionally, developers acquire oceanfront hotels, hold them, renovate them if necessary and then operate them at a profit

We feel the market is receptive for redevelopment of some of those properties either by turning them into large luxury resort hotels or upscale condominiums

The company believes the timing was perfect for such projects because the supply of much oceanfront property is limited.

Doug Kosarek, Vice President, Ocean Waters Development
February, 2005
Daytona Beach Mayor Glenn Ritchey

Daytona Beach Mayor
Glenn Ritchey

Principals Charles Bray and Joseph Gillespie were often seen in local balls rubbing elbows with Daytona Beach Mayor Glenn Ritchey and embattled City Commissioner Dwayne Taylor as well as the city's elite of political campaign donors that have financed the rise to power of the current pack of Commissioners.

Other developers wondered how B&G obtained approvals for what seemed like impossible developments due to the great density and lack of public spaces.

The rezonings gave tenfold returns without ever breaking ground, too great an inducement to just flip the properties to other developers instead of building the proposed projects themselves.

This strategy worked with fabulous results until now...

In another very publicized case, the City of Daytona Beach utilized its powers of Eminent Domain to seize the private properties of long time business owners along a segment of the beach. The parcels were then transferred to a partnership headed by developer and key campaign financer William Geary for a proposed $150 million development.

The partnership recipient of the seized land, is Boardwalk Convention Hotel Partners Ltd., headed by William Geary of Carlsberg Management Co. in Los Angeles.

Today, this land is an unsightly and barren open dirt field right in the heart of the beach district. The partnership was unable to flip the property and never started the planned development. Daytona Beach taxpayers are paying for the bonds used to finance the deal and crafted by city officials.

The Daytona Beach City Commission has been struggling faced with mounting criminal complaints for corruption, fraud, breach of public trust and abuse of powers. The State attorney, John Tanner was recently voted out of office largely for failing to investigate or prosecute the large number of corruption cases against Daytona Beach public officials. Tanner was strongly supported by the same special interests that have benefited with diverse lucrative contracts, funding of pet projects and personal hobbies, and overall preferential treatment by the City Commission.

Daytona Area Ocean Waters Resorts



Bermuda House
Boardwalk Inn and Suites
Conch House
La Playa Resort
Mayan Inn
Plaza Ocean Club
Plaza Resort and Spa
Royal Beach Motel
Saxony Inn
Seaside Inn
Super 8 Oceanfront
Total Rooms
Aqua Terrace Motel
Best Western Mainsail Inn
Comfort Inn on the Beach
Driftwood Resort
La Breeze Inn & Suites
Makai Beach Lodge
Quality Inn and Suites
Total Rooms
Acapulco Hotel and Restaurant
Beachside Plaza Resort
Islander Resort
Palm Plaza Resort
Sunny Shore Resort
Surfside Hotel
Total Rooms


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