Type to search

Featured Tourism/Transportation

ESJ Towers Inc. files for Ch. 11 bankruptcy, citing $39M in debt

The management of the ESJ Towers Inc. tourist/residential condominium in Isla Verde, presided by Act 22 beneficiary Keith St. Clair, has filed for Chapter 11 bankruptcy protection, citing $39 million in debt.

The petition lists dozens of secured and unsecured creditors, including residents, the ESJ Towers Condominium Association, FirstBank Puerto Rico, Oriental Bank — which has the highest outstanding debt payment pending— the Puerto Rico Tourism Co., Parliament Capital, the U.S. Small Business Administration, the Puerto Rico Treasury Department — which is listed as a priority creditor — and Colebrook Financial, among many others.

This is the latest development at the property, where discontent has been brewing between the resident owners and St. Clair since he arrived on the island in 2015, after buying the property from former owner Jack Katz, and began running it. That year, he announced a $12 million renovation and rebranded the property as ESJ Azul, which was eventually rebranded as Mare.

During that same news conference, St. Clair announced two other hotels would be added adjacent to the ESJ Towers — the Noir and Verde — which have not yet come to fruition.

The ESJ Tower has 450 units broken down as follows: 177 are privately owned by residents who either live there or keep the unit as a second home; St. Clair owns 55 hotel rooms and 71 vacation club rooms, which he runs under the Mare flag. The remaining 147 units are owned by deeded interval owners. Each timeshare unit is divided into 24 intervals of 15 days each.

“This is the right path to take for all parties involved,” said Charles A. Cuprill, ESJ Towers’ attorney. “Still, the decision was difficult, but the corporation’s lines of business, have been affected by unexpected events in recent years, such as Zika in 2016, hurricanes Irma and María in 2017, and the shutdown of operations as a result of COVID-19 starting in 2020. The impact of these events have made ESJ Towers’ debt level with creditors unsustainable.”  

Cuprill added that the most severe impact on the finances of ESJ Towers Inc. has been the lack of resolution of its insurance claim, in excess of $20 million, for damages caused by Hurricanes Irma and María in 2017. 

St. Clair reportedly owes more than $5 million in maintenance fee payments to ESJ Towers Condominium on the units he controls, according to News is my Business sources.

Furthermore, the building reportedly owes about $117,000 to the Puerto Rico Aqueduct and Sewer Authority (PRASA) and another $1.2 million to Luma Energy.

ESJ Towers, under St. Clair’s leadership, has already received millions in loans and insurance refunds. After Hurricane María hit in 2017, the building suffered structural damages for which some $4.8 million was received from the insurer, and between April 2020 and February 2021, ESJ Towers received $1.86 million in loans from the U.S. Small Business Administration’s Payroll Protection Program, brokered through Oriental Bank.

The ongoing legal battles within the building took another turn in June 2021, when the Carolina Superior Court appointed a trustee, Wigberto Lugo-Mender, to oversee the operations of the building.

According to a separate court filing on May 28, 2022 St. Clair apparently resigned as administrator of the ESJ Towers Condominium.

Aside from his business dealings at the mixed-use property in Isla Verde, St. Clair has also announced several other projects — including the failed Puerto Rico Film District project in the Convention Center property in Miramar — and hotels that were not developed in Cayey and Vieques.

“It is ESJ Towers Inc.’s goal to continue its operations and retain its employees, for the purpose of reestablishing its financial position and meeting its obligations trough a plan of reorganization, to be filed pursuant to the Bankruptcy Code,” said Cuprill. 

Author Details
Author Details
Business reporter with 29 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other segments of Puerto Rico’s economy.
Tags:

1 Comment

  1. It’s amazing that he uses much money borrowed thing in 10 years to lie but yet no actions that were taken against them by the state the federal government and state of Puerto Rico does nothing but lie and cheat .And in spite of the trustee being appointed by the state of Puerto Rico it seems as though his actions Mr. St. Clair has never changed in any way that justice doesn’t seem to have any bearing on what he does

    Reply

Leave a Comment

Your email address will not be published. Required fields are marked *