The auction of the Spanish Trail Country Club will tee off on April 24 as scheduled despite a last-minute challenge by the main lender.
Hermitage Management LLC, the unit of Jackson National Life Insurance Co. that has the mortgage to the prestigious but debt-laden golf club, requested Friday that U.S. Bankruptcy Court Judge Bruce Markell loosen the long-standing conditions governing the use of the land and access to it.
“These are key points of clarification that are needed before people know what they are bidding on and what price they should bid,” said Robert Kinas, the attorney representing Hermitage.
But Markell ruled that an in-court sale was not the forum for changing arrangements in place for more than a quarter century. Jackson National made its $15 million loan to the club in 2007.
Had he accepted Jackson National’s argument, the subsequent litigation might have extended well past April 24 and delayed the auction indefinitely.
The 249-acre, 27-hole course, surrounded by the separately owned and governed Spanish Trail community, agreed in 1985 to keep the land as a golf course and restrict entry to club members and guests. Jackson National wanted the ability to open the club to the general public in hopes of attracting more bidders to the auction and boosting the final price.
Officials at the Spanish Trail Master Association, which acts as the homeowners association for the 1,300-home community, declined to comment. The association not only controls the front gate but also could take ownership of the club if the restrictions were violated.
A group of at least 50 club members, led by Cannery Casino Resorts principal Bill Paulos, has put together an opening bid of $6 million. The terms call for the members to put up at least $2 million and borrow a maximum of $4 million.
Paulos said that group would “not get into a bidding war with anybody. I am a businessman and this is a business deal. The others (joining the bid) are not bleeding hearts, they are investors.”
The plan for resuscitating the club calls for various initiatives to boost membership, which has dropped sharply in the past five years. Paulos said he would “prefer not” to reach the point where the court and club facilities are open to the general public.
Jackson National promised to make a $6 million credit bid, which allows it to count what it is owed on its loan without adding fresh cash. Club attorney Gregory Garman declined to say who would win in the event of a tie between the club members and Jackson National.
Contact reporter Tim O’Reiley at toreiley@review
journal.com or 702-387-5290.