A circuit court judge approved this week a petition to foreclose on more than 200 units and the commercial space at the iconic Ilikai hotel in Waikiki.

The move paves the way for the sale of the landmark property, either in bulk or individually likely through a public auction.

“;This has been the most challenging receivership I have ever undertaken,”; said Joseph Toy, the court-appointed receiver of the Ilikai, while declining to specifically address the case. “;In general, once a foreclosure decree is granted it typically provides a more firm direction as to the resolution of the asset.”;

New York-based iStar FM Loans LLC filed the approximately $75 million foreclosure lawsuit in Circuit Court on the residential and retail mortgages held by developer Brian Anderson and his companies, which operates the condominium hotel that has been plagued for two years by controversy over its redevelopment.

“;It's a difficult property to bid on unless you're extremely wealthy or have very deep pockets,”; said local developer Peter Savio, who is planning to put in an offer once a commissioner is appointed by the court. “;When you buy in that situation you've got to have cash set up. Right now the big problem is getting financing.”;

Savio, who is in talks with several lenders, said that the asset is underperforming and therefore not generating sufficient income. That, coupled with the economic recession, could lead a bulk buyer to seek substantial discounts on the units, he said.

“;There's just uncertainty in the marketplace,”; Savio said. “;The alternative is if they sell the units individually under a highly-structured program they may actually be able to get more money.”;

Anderson and his companies are in default of nearly $48.7 million in principal, unpaid interest and other fees on a $115 million residential loan secured in July 2006 from then-Fremont Investment & Loan, which was acquired by iStar. Anderson, who didn't return a call for comment, simultaneously borrowed $26.6 million in a separate retail loan and another $4.8 million in March 2007, of which he owes $23.9 million.

His attorney, Gary Dubin, said that his alternatives are selling the property directly prior to a public auction, settling with lenders or seeking relief with the U.S. Bankruptcy Court or seeking reconsideration in state court.

“;This is the second inning of a nine-inning baseball game,”; Dubin said. “;We're confident that we will prevail in the end.”;