The Chapter 11 filing for the Mullen, Neb. club, which has courses designed by Jack Nicklaus and Tom Doak that are ranked among the best in the state, grew out of a dispute with minority owners, according to principal owner Joel Jacobs said, and is expected to be dismissed soon. The club’s revenues have tripled in four years and net income exceeded $1 million for the first time in 2020, Jacobs said, with reservations up 50% for this May vs. a year ago, and a waiting list now formed for membership.
The Chapter 11 bankruptcy filing of the well-regarded Dismal River Golf Club in Mullen, Neb. was caused by a dispute with minority owners and does not signal that the club is in danger of closing, principal owner Joel Jacobs told the Lincoln (Neb.) Journal-Star.
The club in the state’s scenic Sandhills region opened in 2006 and has two 18-hole courses—a White Course designed by Jack Nicklaus and a Red Course designed by Tom Doak that is ranked third in the state by Golf magazine, behind the nearby Sand Hills Golf Club and the Dunes Course at the Prairie Club near Valentine, Neb., the Journal-Star reported.
Jacobs, who bought Dismal River in 2017 to become its fourth owner, told the Journal-Star that the Chapter 11 filing in January by Dismal River Holdings LLC grew out of a dispute with minority owners who he “tried to help out” with financial issues.
“Since 2018, I’ve had a couple of minority shareholders with their own personal financial issues I’ve had to deal with,” Jacobs said in an e-mail. “In the spring of 2020, I tried to help these individuals out by giving them a redemption agreement to buy back shares of a privately held investment management company and a minority amount of Dismal River shares.
“I had a partnership lined up at the same time I put the agreement in place right before COVID last year,” Jacobs’ e-mail continued. “The new partnership fell through for reasons out of my control and the distressed shareholders at that point didn’t want to work out a solution.”
According to court documents, Jacobs agreed to buy out those shareholders in transactions that “called for [a] very aggressive repayment schedule,” requiring him to pay the two investors a total of more than $6.5 million by May of this year, the Journal-Star reported.
The documents say Jacobs agreed to the payment schedule because he was expecting a “substantial capital infusion” from a third-party investor, the Journal-Star reported. However, that deal fell through, leaving him unable to make the payments, and triggering the foreclosure action.
The filing for Dismal River Holdings LLC came shortly after notices of a foreclosure sale were posted in the Hooker County (Neb.) Tribune, the Journal-Star reported. Chapter 11 bankruptcy petitions were also filed for affiliated companies J. Jacobs Co., HC Land Co. and DRC III.
Jacobs Co., DRC III and Dismal River Holdings all listed both assets and liabilities between $10 million and $50 million, the Journal-Star reported. HC Land Co. listed assets and liabilities between $1 million and $10 million.
Since Jacobs, a Mullen, Neb. native who lives in Omaha, Neb. took over Dismal River GC, it has expanded its offerings to include hunting, fishing, shooting, kayaking and a number of other outdoor activities, the Journal-Star reported.
The court documents say the club has seen record membership interest and has tripled its revenue since Jacobs took over, hitting more than $7 million last year.
The club had net income of more than $1 million in 2020 for the first time ever, Jacobs told the Journal-Star, and is looking forward to a successful year in 2021. Reservations for May are up 50% compared with last year, he added, and there is a waiting list of people who want to be members.
“Since filing for the reorganization in January, everything is going great at the club and it has been business as usual,” Jacobs said, adding that he expects the bankruptcy case to be dismissed soon.
Dismal River is the largest employer in the Mullen area, and “has become very important to the stability and growth of the small towns in the Sandhills region,” Jacobs added. “I’m going to do whatever I have to do to protect this.”
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