Bridge loan buying time for Empire Ranch Golf complex sale?
Empire Ranch Golf Course is getting a $1.3 million bridge loan from a secondary creditor to pay the key creditor while a bankruptcy-imposed sale drags on.
Carson City’s Dwight and Sandra Millard issued a statement and their Reno-based bankruptcy attorney filed documents overnight with the U.S. Bankruptcy Court of Nevada detailing the loan at a 4.5 percent annual interest rate to pay off Garth Richards’ GSR Investments, LLC. Richards, a developer, who also has Silver Oak Golf Course and Conference Center.
The loan is coming from Patricia Thompson, who holds a portion of a second priority deed of trust, to pay GSR, holder of the first priority deed of trust.
“The DIP (debtor-in-possession) loan will protect junior lien holders by taking out the only party threatening to foreclose on debtor’s real property,” Kevin Darby, the Millards’ attorney, wrote in one of several recent court filings uncovered Wednesday morning.
“Regarding Empire Ranch Golf Course,” the Millards said in a statement released to the Nevada Appeal at 8:14 p.m. Tuesday, “a new lender signed a loan document and wired $1.3 million to the trust account of our attorney, Kevin Darby, so that, as soon as the court approves it, we will pay off GSR Investments with (the money from) a new loan that will provide us with a lower interest rate and better terms.” The statement also addressed the pending sale:
“John Dunn and Rich Wolfe, principals of Carson Creek Resort, Inc., are staying in touch with us regularly regarding the delays in getting their funds released to conclude the purchase of Empire Ranch Golf Course. We are hopeful that they work out the complications shortly so that we can close.”
The count-ordered sale to Carson Creek Resort, delayed for weeks, has involved a southern California group who apparently had earlier pledged to the Millards it would cover the $1.3 million needed to satisfy the GSR claim. On Sept. 8, Sandra Millard in a statement to the Appeal wrote:
“The main changes is the close of escrow date from Sept. 4th to on or before Sept. 21st. The buyer is making a substantial additional deposit on or before Friday, Sept. 11.”
The deal’s closing then was targeted for last Friday, but that and a Monday safety valve deadline passed. By the end of this week, it appeared, the Millards had to file a back-up plan, a reorganization plan or the case would be dismissed. The late Tuesday filings and statement likely staves that off and also calls for a hearing in October to move forward, Darby in one filing said the GSR counsel and city government had been consulted.
Carson City officials have been involved over back property taxes/utility payments and due to a contract with Empire Ranch to dispose of city-treated wastewater effluent. The latter matter is of particular concern to city government because Empire Ranch is one of three golf course complexes, as well as state prison farm lands, on which effluent water goes to keep it out of the Carson River.
Avoiding river effluent discharge is required by federal clean water law and regulations.
Patricia Thompson and Stanton Park Development are second in priority in the bankruptcy proceedings, with GSR first while others trail as creditors. For example, the Internal Revenue Service is sixth in line at $64,748.
Thompson/Stanton Park is listed as being owed more than $2 million, while GSR is said to be owed more than $1.2 million. The Thompson loan, after paying Richards off, will leave the Millards approximately $83,000 to help with ongoing golf course operating expenses. The Thompson note involving the 221-acre, 27 hole golf course operation, according to Tuesday night’s court filings, requires repayment upon sale of debtors’ property by Oct. 1, 2018.