An unprofitable bent-grass golf course in Hanover County will likely have new owners within 60 days.
The Federal Club, which has not turned a profit since opening more than three years ago, will likely be auctioned to the highest bidder unless the current owners can find an investor to pump millions into the club. The course is in Chapter 11 bankruptcy protection.
So far the main interest is from a group of current members who are offering $2 million for the golf course, according to several sources close to the negotiations. That figure, which is about $13,000 per member, is still being negotiated. The course cost about $9 million to build, or $60,000 per member.
The members will likely submit a stalking horse bid, which means that if other buyers don’t emerge with a higher bid, the members get to purchase the course. The bankruptcy judge will have to approve it.
“We expect to sit down with them and work out the rest [of the details] between now and Wednesday,” said Scott Lantzy, a Federal Club member who is spearheading the negotiations on behalf of the other members and meeting with the Bank of Essex and the current owners/operators of the course.
Lantzy said his group has created a business plan. If the members buy the course, they will probably keep it open for public play until they get 300 members. At that point they would have enough revenue to run a private club and it will be members-only, Lantzy said.
The new owners would buy the course free from liens, but that would likely leave unsecured creditors with a slim chance of recovering several million dollars they are owed from work performed building the course.
The Bank of Essex, which is owed more than $8 million and is not receiving monthly payments from the debtor, said during the bankruptcy hearing that it was willing to finance the purchase. That’s partly because the bank wants to make sure the course – its main asset – stays in top-notch shape. The bank declined to comment.
At least one other local golf course operator has looked at the books, but it is unclear how many other bidders there may be.
The bank wants to get the course into new hands to make sure the course is maintained.
The debtors are running low on cash but are still looking for an investor. And if they found one, they could keep control of the course.
“We have about 60 to 90 days after the meeting next week to come up with somebody,” said Ray Tate, one of the founders and investors.
“But if we had one, we would have had it by now.”
The bankruptcy court will determine the next steps March 31.
A similar sale might occur later for undeveloped residential lots near the course.
Aaron Kremer is the BizSense editor. Please send news tips to [email protected].
An unprofitable bent-grass golf course in Hanover County will likely have new owners within 60 days.
The Federal Club, which has not turned a profit since opening more than three years ago, will likely be auctioned to the highest bidder unless the current owners can find an investor to pump millions into the club. The course is in Chapter 11 bankruptcy protection.
So far the main interest is from a group of current members who are offering $2 million for the golf course, according to several sources close to the negotiations. That figure, which is about $13,000 per member, is still being negotiated. The course cost about $9 million to build, or $60,000 per member.
The members will likely submit a stalking horse bid, which means that if other buyers don’t emerge with a higher bid, the members get to purchase the course. The bankruptcy judge will have to approve it.
“We expect to sit down with them and work out the rest [of the details] between now and Wednesday,” said Scott Lantzy, a Federal Club member who is spearheading the negotiations on behalf of the other members and meeting with the Bank of Essex and the current owners/operators of the course.
Lantzy said his group has created a business plan. If the members buy the course, they will probably keep it open for public play until they get 300 members. At that point they would have enough revenue to run a private club and it will be members-only, Lantzy said.
The new owners would buy the course free from liens, but that would likely leave unsecured creditors with a slim chance of recovering several million dollars they are owed from work performed building the course.
The Bank of Essex, which is owed more than $8 million and is not receiving monthly payments from the debtor, said during the bankruptcy hearing that it was willing to finance the purchase. That’s partly because the bank wants to make sure the course – its main asset – stays in top-notch shape. The bank declined to comment.
At least one other local golf course operator has looked at the books, but it is unclear how many other bidders there may be.
The bank wants to get the course into new hands to make sure the course is maintained.
The debtors are running low on cash but are still looking for an investor. And if they found one, they could keep control of the course.
“We have about 60 to 90 days after the meeting next week to come up with somebody,” said Ray Tate, one of the founders and investors.
“But if we had one, we would have had it by now.”
The bankruptcy court will determine the next steps March 31.
A similar sale might occur later for undeveloped residential lots near the course.
Aaron Kremer is the BizSense editor. Please send news tips to [email protected].