Seven months ago, the Garland, Texas club filed for Chapter 11 protection, but creditors have seen “little progress” since then, prompting the court-appointed bankruptcy trustee to employ a real estate agent at the club. The 198-acre property, valued as high as $8 million, owes $838,000 in debt, with more than half owed to the Internal Revenue Service, and has been closed for two weeks.
A court-appointed bankruptcy trustee has been asked to employ a real estate agent at Eastern Hills Country Club in Garland, Texas, as creditors have seen little progress in the seven months since the club filed for Chapter 11 protection, the Dallas (Texas) Morning News reported.
The club’s 198 acres near Lake Ray Hubbard are valued at $5 million to $8 million, more than enough to pay off its many creditors. The golf course, tennis facilities, pool and clubhouse have been the centerpiece of the southern part of the city since the club was founded in 1954, the News reported.
Its gate has been closed for two weeks, and its phone has been disconnected. On the club’s Facebook page, administrators posted: “We are temporarily closed for maintenance issues, but plan to reopen.”
An hour later, its most recent Facebook post referred questions to an email address. There was no response to an email sent by The Dallas Morning News to that address. The attorney listed for the club did not return messages.
According to court documents, some creditors believe forced sale of the property is in their best interest. Trustee Robert Yaquinto of Dallas, appointed by the federal bankruptcy court January 10, filed Wednesday to hire an agent for the possible sale, the News reported.
While the land is a tangible asset to the creditors, the use is particularly important to the homeowners, said Stephen Stanley, a real estate professional and the Garland council member who represents the area. “Where a large portion of that value stays in that land is in the continuous operation of a golf course,” Stanley said.
Separate from the bankruptcy case, some of the club’s longstanding members have met with an attorney to determine their rights, the News reported.
Representatives for the state comptroller and the Texas Workforce Commission, both creditors, believe the trustee will make sure there is an independent review of the business and property, and bring experience to negotiating a sale, the News reported.
The club’s debt is listed at $838,000, with more than half of it owed to the Internal Revenue Service. The club hasn’t paid sales or unemployment taxes and defaulted on payments to protect investments on golf carts and other equipment, the News reported.
PNC Equipment Finance said the 73 electric golf carts it leased to the club were sold without the company’s knowledge. The suit says that a month after filing bankruptcy, president David Harvey took out a $66,000 loan on behalf of the club without court approval and in violation of the law, the News reported.
“The Debtor incurred post-petition debt without court authority, has failed to keep current on tax obligations and cannot sustain its secured obligations to equipment lenders,” according to a U.S. trustee’s November 25 motion to convert the bankruptcy to Chapter 7 and liquidate the property, a motion that was terminated as the trustee was appointed, the News reported.
The suit also said that the club had not been successful in selling its land or increasing membership in the golf club, making reorganization less feasible, the News reported.
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