In The News: Colony Capital May “Throw Their Hat Into The Ring” To Stop Julien’s Auctions Sale of Michael Jackson Property

March 30, 2009 by Jason DeBord

Fox 411′s Roger Freidman, who has been out in front with the developments concerning Julien’s Auctions event and Michael Jackson’s efforts to stop it, today reports that Colony Capital may also take steps to halt the sale of Jackson’s personal property and memorabilia.

Dr. Tohme Tohme, President of Michael Jackson’s MJJ Productions, signed an agreement with Julien’s Auctions in July 2008 consigning all personal property left at Jackson’s Neverland Ranch to public sale. Darren Julien and staff inventoried and moved the property offsite and prepared for the promotional exhibition and subsequent auction, currently scheduled for April 22-25 in Beverly Hills.

Earlier this month, in conjunction with the announcement of his concert tour, Jackson objected to the sale of his property and MJJ Productions filed suit in Los Angeles against Julien’s Auctions to stop the auction.

Full details can be found in prior Original Prop Blog coverage:

Auction House Controversies In The News: Christie’s & China, Antiquorium & India, Julien’s Auctions & Michael Jackson
Auction Network Pulls The Plug On Julien’s Auctions Amid Michael Jackson Lawsuit Controversy
Superior Court Lawsuit Filing: Michael Jackson’s MJJ Productions, Inc. vs Julien’s Auction House, LLC
Michael Jackson & Julien’s Auctions Lawsuit Update, Claims of Threats: “Lives Are At Stake and There Will Be Bloodshed”
Michael Jackson & Julien’s Auctions Lawsuit Update: Review of Preliminary Injunction Declarations, Consignment Agreement
Today, Fox News reports that Colony Capital may get involved in the dispute, based on their having purchased Neverland Ranch last year to prevent foreclosure.

An excerpt from FoxNews.com and Freidman’s story (see “Jacko’s Dad Still Wants Piece of Pie”):

Meanwhile, conversations will take place this week among all the parties involved in the auction of the contents of Jackson’s Neverland ranch. Jackson and his manager, Tohme R. Tohme, signed papers last summer authorizing the auction. It was only as the date drew near that they recanted, and now claim they didn’t understand what they were getting into. The auction is set for the last week of April.

Now I’m told that Colony Capital LLC may throw their hat into the ring and file to stop the auction as well. Colony is Jackson’s financial partner in the ranch, and would like to sell it. A deal is on the table – as reported here first – but it includes all the memorabilia taken for auction.

And the auction plans proceed apace. Last week, Julien’s Auctions put on display some of the best items at the Hard Rock Cafe in New York. Hundreds of fans came for a gander at Jackson’s stuff. Stopping the auction is still possible but it would be like putting a genie back in its bottle.

Based on an article published by Freidman on FoxNews.com a little more than a year ago, when Neverland Ranch was originally subject to foreclosure, it appears that personal property left at Neverland was also subject to seizure at that time:

Michael Jackson’s Neverland Foreclosed; Auction Date Set

Tuesday, February 26, 2008

By Roger Friedman

Michael Jackson’s Neverland Ranch is set be sold at auction on March 19.

Jackson received word Monday from Financial Title Company, the trustee, that unless he pays off $24,525,906.61 by that date, a public auction will go forward in Santa Barbara, Calif., in front of the county courthouse.

It’s not just the house either. When Neverland is auctioned, it will include everything: all personal property inside, all fixtures and appliances, furniture, and “all merry go round type devices,” any rides, games. The auction literally includes every single thing that is or isn’t nailed down.

At this point, Jackson may just let the auction proceed. He hasn’t been at Neverland since June 30, 2005, when he departed for Bahrain. No one lives there, the animals in the zoo are all gone, the rides are either sold or shut down.

Financially, Jackson remains in no position to cure his dilemma. Even though he refinanced his $300 million loan from Fortress Investments with help from Sony Music, HSBC and Barclays Bank, the Neverland loan was not part of that deal. Fortress would clearly like to get out of the Jackson business altogether now, so selling at auction is their answer.

What if no one comes up with a decent bid? Fortress will likely take possession and list the property with a Santa Barbara real estate broker. Neverland could be marketed as a corporate retreat. Or perhaps a very wealthy new owner will show up and make a fire sale pitch.

But an era is about to end forever: Jackson, who brought this on himself, is about to lose one of his two biggest assets. All that will remain after that will be his song publishing interests, and they are leveraged into the next millennium.

More to come…

Below is the Financial Title Company – Notice of Trustee’s Sale document:

Click for Full Document

In May 2008, a representative for Michael Jackson issued a press release about Jackson selling the note for Neverland Ranch to Colony Capital (see BusinessWire):

Neverland Ranch Note Sold to Colony Capital

LAS VEGAS–(BUSINESS WIRE)–Michael Jackson today announced that the foreclosure sale of his Neverland Ranch property scheduled for this week has been cancelled by Colony Capital, LLC, which just acquired the existing loan on Neverland Ranch from an affiliate of Fortress Investment Group. Mr. Jackson said, “I am pleased with recent developments involving Neverland Ranch and I am in discussions with Colony and Tom Barrack with regard to the Ranch and other matters that would allow me to focus on the future.”

As reported last week, Tohme Tohme signed the Consignment Agreement with Julien’s Auction in July 2008.

In November 2008, “Sycamore Valley Ranch Co. LLC” was reported as a joint venture between Colony Capital, LLC and Michael Jackson (see USA Today), with Jackson transfering the deed to the property to that new entity (an affiliate of Colony Capital):

Michael Jackson gives Neverland to corporation
Posted 11/13/2008 2:57 PM
By Robert Jablon, Associated Press Writer

LOS ANGELES – Michael Jackson has given up title to his Neverland ranch, transferring the deed to a company he partly controls.

The singer filed a grant deed on the ranch Monday that makes the new owner an entity called the Sycamore Valley Ranch Co. LLC, Tom Pearson of the Santa Barbara County clerk-recorder’s office said Wednesday.

Sycamore Valley Ranch Co. is a joint venture between Jackson and an affiliate of Colony Capital LLC, according to a person with knowledge of the transaction who was not authorized to speak on the record and requested anonymity.

The person could not say what would become of the 2,500-acre property in the bucolic, oak-studded hills of Santa Barbara County’s wine country, 120 miles northwest of Los Angeles.

A call to an attorney for Jackson, L. Londell McMillan, was not immediately returned Wednesday.

Jackson had gone into default on the $24.5 million he owes on the property and had faced foreclosure before Colony Capital bailed him out earlier this year by purchasing his loan.

Pearson said the deed did not indicate who owns Sycamore.

A listing on the California secretary of state’s Web site says the company filed with the state in June. It does not identify its owners, but the company has the same Century City address as Colony Capital LLC.

Colony Capital is a Los Angeles-based real estate investment company run by billionaire Tom Barrack. It owns several properties in Las Vegas, including the Las Vegas Hilton.

The property was called Sycamore Valley Ranch before Jackson bought it in 1988 and began turning it into a miniature amusement park with a zoo, Ferris wheel, roller coaster and other rides.

At the height of his popularity, the superstar invited thousands of children to play on the grounds.

He renamed the ranch after the mythical land of Peter Pan and set about creating the magical childhood experiences he said his career as a child star had denied him.

“It’s like stepping into Oz,” he once said of Neverland. “Once you come in the gates, the outside world does not exist.”

Jackson has struggled to pay his debts since his financial empire began to crumble following his arrest in 2003 on charges that he molested a 13-year-old boy at the ranch. He has not been seen in the Los Olivos area since a jury acquitted him of all charges, and recent aerial photos show the ranch falling into disrepair.

Per a Roger Freidman report a few weeks ago, a buyer for Sycamore Valley (the renamed Neverland Ranch) has materialized, but they want the former contents of the estate as well (which are obviously the same items slated for auction with Julien’s that are currently under dispute).

The estimate for the Julien’s sale is $10 million to $20 million. The amount reportedly on the table for Neverland Ranch is enough to payback the $23.5 million Colony Capital note as well as net Michael Jackson several million dollars.

Full details on this part of the story can be found at FoxNews.com: Neverland Sale in Negotiations

Friedman has also delved into the role of Dr. Tohme Tohme in these events, as found in another article: Jacko’s Mystery Manager Revealed

Given Tohme Tohme’s business relationships with both Michael Jackson (as manager and President of MJJ Productions) and Colony Capital (a client of Mr. Tohme’s TRW Advertising), it will be interesting to see if there are any further developments and complications with the scheduled auction. At the time of this writing, Mr. Tohme’s TRW Advertising (Tohme, Rogich, & Weller) website appears to be offline (see http://www.trw-adv.com).

Per the Los Angeles Superior Court of California – County of Los Angeles Case Summary, the next two scheduled hearing for MJJ PRODUCTIONS INC VS JULIENS AUCTION HOUSE LLC ET AL are currently listed as April 3rd and April 15th (one week in advance of the April 22nd start date for the auction).

Status of the online bidding service provider to be used for the auction, should it proceed, remains uncertain with no public developments since the last updates.

Full List of OPB Articles: Julien’s Auctions | Michael Jackson
Jason De Bord

Source: http://www.originalprop.com/blog/2009/03/30/in-the-news-colony-capital-may-throw-their-hat-into-the-ring-to-stop-juliens-auctions-sale-of-michael-jackson-property/

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