Spanish Trail heads to the auction block
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.
