So now the Bank of Essex, which is owed more than $8 million, will take the stalking horse bid at $3.5 million and then try to find a higher bidder. The bank does not want to manage the golf course, said a lawyer for the bank.
Two deals have fallen apart. The two parties that days ago were interested in bidding for the distressed golf club in Hanover County are losing interest, or at least feigning that they are less interested.
The Federal Club, an $8 million bent grass golf club in Hanover County with several dozen undeveloped home lots, has been in bankruptcy protection since last fall. The bankruptcy court is pushing hard for the club to be sold so that creditors can be repaid, but the process is dragging.
Local developer Bob Atack pulled his $3.5 million bid when he and the current operators of the Federal Club couldn’t agree on terms, according to proceedings at a bankruptcy hearing Tuesday.
When reached by phone Tuesday, Atack said that the price was not the sticking point, but he would not elaborate.
“As far as the Federal Club plan, we are curious but a disinterested party,” Atack said.
Meanwhile, a group of Federal Club members, who two weeks ago seemed excited about a $2 million bid for the course, thought they were close to a deal. Now they are getting frustrated and said their offer will be lower if they bid again.
Some of the members also said that the course is deteriorating, a claim the Bank of Essex denies. Some of the members are annoyed that there have been some small cuts in maintenance. For example, the sand traps are not being raked as often.
“Our estimates [predict] the debtors do not have the cash to maintain the course, and we are very, very worried,” said Lawrence Framme, a Federal Club member who vented his concerns at the bankruptcy hearing.
Framme also complained that the current management, who are also the debtors, did not negotiate in good faith.
“We had a deal with the bank, and we have not been asked to renew the deal. We are the jilted lover,” Framme said, clearly exasperated.
The bankruptcy judge said he will make sure the current member group gets a fair shot at bidding.
Scott Lantzy, a Federal Club member who has been serving as the spokesman for the group of members looking to buy the club, said that the Bank of Essex needs to careful not to drive away the members, which would reduce the value of the course. So far members have not left in droves, but they’d prefer a clearer plan, he said. He said that although some members think the condition is deteriorating, others think it’s still in great shape.
As of Tuesday, the plan seems to be that the Federal Club will still be auctioned off to the highest bidder, but now the Bank of Essex will be the stalking horse bid, a rare occurrence in a bankruptcy proceeding.
The bank will then try to market the club to generate higher bids. Vernon Inge, a lawyer with LeClairRyan who is representing the Bank of Essex, said in hearing that he thinks there is a 50/50 chance there will be a higher bid. The bank will hire a marketer to promote the course.
He had said in previous court proceedings that he has gotten calls from a handful of interested parties. At least one local golf course group has confirmed to BizSense that it looked briefly at the books.
The bankruptcy court will hear the case again Thursday, and if a purchase agreement is ready, the court will approve bidding procedures.
Aaron Kremer is the BizSense editor. Please send news tips to Editor (at) richmondbizsense.com.