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Spanish Trail heads to the auction block
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LAS VEGAS REVIEW-JOURNAL
The Spanish Trail Country Club, one of Las Vegas' most exclusive golf venues for more than two decades, will head to the auction block as the finale of its Chapter 11 bankruptcy.
In court papers filed late Friday, club attorneys said this option was pushed to the fore after the mortgage holder, a unit of Jackson National Life Insurance Co. called Hermitage Management LLC, effectively lost patience with the course of the case.
Under a deal reached in December, Jackson National allowed Spanish Trail the sole right to propose a reorganization plan, but chose to end the arrangement on Feb. 7 by pre-negotiated terms.
If the club wins court approval at a Feb. 23 hearing to extend that right, known in bankruptcy law as the exclusivity period, the case would then proceed to setting the bidding rules on March 19, conducting an in-court sale on April 18 and seeking approval of a reorganization plan that includes the sale on June 1.
Commenting on behalf of Spanish Trail, spokesman Steve Stern said, "The club is not up for sale. We are looking at a range of refinancing options."
But the court filings by Spanish Trail sketch a much different picture. Club attorney Gregory Garman wrote that he probably would make public the terms of the sale this week "to a prospective purchaser" who was not identified. The subsequent provision for an auction opens the possibility the buyer would put in a "stalking horse bid," a common auction tactic that sets a minimum price.
However, Jackson National would retain the ability to credit bid, where the balance owed can be substituted for cash, dollar-for-dollar. According to financial statements filed last September, the Jackson National debt stood at $13.5 million, but the club's value was estimated at only $6 million.
In arguing to retain exclusivity, the club cited the concern that a Jackson National competing reorganization plan could rattle members and "cause further uncertainty" about the future.
That marks an about-face from last November, when court papers noted that the club and Jackson National "have developed a collaborative and cooperative relationship with the common objective of arriving at a consensual plan of reorganization."
As a nonprofit corporation, the dues-paying members own the club. Numbers provided when the bankruptcy was filed last August showed the membership had dropped by half since 2007, to 382.
Opened in 1984 within the separately owned Spanish Trail gated community, the golf course spreads 27 holes over 249.1 acres. In addition, the club owns its 57,000-square-foot clubhouse, which has banquet rooms, a restaurant and locker rooms.
When the economy was still strong in 2007, the club took what was originally a $15 million loan from Jackson National to refinance old debt and to pay for improvements. But as membership dwindled and golf's popularity in Las Vegas generally slumped, the club could no longer cover mortgage payments and filed for Chapter 11 protection days before Jackson National could have foreclosed.
Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.
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Right now, Spanish Trails Country Club is probably worth about $5 million. The residents of Spanish Trails could buy the Country Club back at the auction for a few thousand each. Their property values could fall a lot more than that if the wrong bidder wins.
ideal scenario, would be, for few Golf Pro's to join and buy the club and put money in to it and turn it around like Shadow Creek. No outside investor will touch it with a ten foot golf club.
@ David ... over the course (no pun intended) of the last 25+ years, most of the equipment such as irrigation pumps etc has become worn out. It is obvoius that the course managment didn't save any income for the replacement of such things, and when something suddelny quits working ... they have to take out loans just to keep things maintained. Follow the money.
This is yet another Southern Nevada case of people buying homes or condos with "fairway frontage", only to find out that the fairways may be closed and the golf course land redeveloped as "something else". Even if the Spanish Trail golf course land is currently zoned for open space or recreational or golf course use, there is nothing to prevent a new owner from applying to the relevant government agency for a zone change to build housing. Even if there are "deed restrictions" in place to prevent construction of structures on the golf course, it's an open question whether the bankruptcy court can erase the deed restrictions in approving an auction sale before or after a Chapter 11 Plan is approved by the court. Not a pleasant scenario. For their own sakes, I hope the owners of the fairway frontage homes and condos along the golf course are paying attention to what is going on, and asserting any rights they have to enforce deed restrictions on the uses of the golf course land.
Section 8's moving in yet?
Siena and Red Rock golf courses and restaurants are own by a gentleman from California which keeps the HOA fees low. The dues for the fitness club are handled by a Scottsdale company. Residents complain about the cost of golf not being reduced for homeowners.
@Reality Bites -- No one complained during the boom. I remember home owners bragging about their cash-out refis.
Scenery along the road to recovery when the only plan is to threaten the Golden Goose. Brilliant, You Betcha.
Since 1984, dozens of golf courses have been built in L.V... The people running this place continued to think they could overcharge and abuse people playing the game............................. Since Tiger Woods.? Millions more people started playing........................ So the people who run this place still could not see in front of their noses.......................................... Greed, take the money and run, that's their motto......................... Well, they be running now...
Bad news of all of the parties involved. Spanish Trail thought that improved facilities would enhance the value of their club. (wrong) Jackson Nation thought they were making a loan on a property that was appreciating in value. (wrong) The members of the club got to enjoy 4 years of a nicer clubhouse and dues that were twice as high as any place in the valley.