The Sheraton Keauhou Bay Resort and Spa has defaulted on the nearly $60 million remaining on its mortgage, interests and fines, and will be sold at auction July 31.

Kenneth Marcus, a commissioner appointed by 3rd Circuit Court Judge Ronald Ibarra, confirmed yesterday that the resort will be sold at an auction in front of Hale Halawai.
“As far as the operations of the hotel, nothing is likely to change, for all outward appearances,” Marcus said. “In terms of the short term, it should be business as usual.”
He could not say for certain what would happen to the hotel after the sale, though he said it would be unlikely for someone to purchase it and close it.
According to court documents, Marcus, acting as a third-party commissioner for the judicial foreclosure proceedings, assisted during collective bargaining negotiations, which wrapped up in the spring.
Attempts to reach the resort's general manager were unsuccessful Wednesday and yesterday.
The notice of foreclosure sale, which Marcus said will be advertised starting Sunday, said the auction does not have an upset price. Interested bidders must register with Marcus at least five days before the auction, and potential bidders must sign a confidentiality agreement before being permitted to review some financial documents. Marcus will take the winning bid to Ibarra's court, where overbids are allowed, and Ibarra will approve the winning bid.
Prospective buyers will be purchasing the leasehold, 521-room resort and spa on about 20 acres of land owned by Kamehameha Schools. The resort has three restaurants and bars, 65,000 square feet of meeting space, a 14,000-square-foot fantasy pool, the Hoola Spa, 12,800 square feet of retail space, a 50-seat wedding chapel, a fitness center, a business center and two tennis courts.
Marcus said he thought the title would be delivered to the buyer sometime in September.
According to county property tax records, Koa Hotel LLC does not owe any back taxes. Kekoa Paulsen, spokesman for Kamehameha Schools, said the leaseholders were not in default on lease payments.