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Court may launch Queen Mary auction

Two vying to run the attraction are expected to attend a bankruptcy proceeding today.

August 14, 2007|Andrea Chang | Times Staff Writer

A developer and a group of investors are expected to vie today to run the Queen Mary attraction and its surrounding Long Beach waterfront property, city officials said.

The officials said the bidders -- real estate developer O&S Holdings in Santa Monica and a group called Save the Queen -- would appear in U.S. Bankruptcy Court in Los Angeles.

The city, which owns the Queen Mary, has been trying to find a new partner for the ship after its leaseholder, Queen's Seaport Development Inc., filed for bankruptcy protection two years ago. The effort is aimed also at resolving debts and raising new capital.

"It's been an ongoing problem and we're hoping to finally be able to put it behind us," City Atty. Robert Shannon said.

Last month, Save the Queen had bid $49 million to purchase the ocean liner's lease outright and pay all creditors in full, but then withdrew the offer because of what it characterized as the city's refusal to agree to key issues. The group declined to comment further.

The ship, which had its maiden voyage in 1936, has been permanently docked in Long Beach Harbor for nearly 40 years. It features an on-board hotel, restaurants, exhibits and other attractions.

Save the Queen already has submitted a $43-million bid, countering an opening O&S offer of $41 million, said lawyer Steve Gubner, who is handling the city's interests in the bankruptcy proceeding.

Howard Ehrenberg, the court appointed trustee for the bankrupt company, said the court may rule on several legal issues just before the auction.

Among them is the opposition to the sale filed Friday by a Queen's Seaport minority shareholder, which claims that it is a subtenant and entitled to a portion of the proceeds. And Save the Queen's attempt to bid might be challenged in court because the group initially submitted a non-conforming offer.

Regardless of which developer wins the auction, the city would continue to be involved in development plans for the 45-acre site, Shannon said.

"No developer will unilaterally be able to determine what the development will be," he said. "This will be something that will be negotiated over time with the city."

O&S, which develops retail and entertainment complexes, said it would like to turn the site into a world-class tourist destination with a hotel, theaters, shops and restaurants. Save the Queen has plans to develop a resort with hotels, a marina and various entertainment, dining and retail attractions.

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andrea.chang@latimes.com

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