By Jeff Clark and Peter Imes/The Commercial Dispatch
COLUMBUS — After a year of toiling in a financial quagmire, Columbus Country Club board members are preparing to submit their second reorganization plan with the U.S. Bankruptcy Court.
The club, which has operated at its present location since 1923, filed Chapter 11 bankruptcy on May 3, 2011. Chapter 11 bankruptcy allows a business to reorganize to pay its debts.
Court documents reported the club owes money to three primary secured creditors: $1.5 million to a group of five banks, $190,672 to Cadence Bank and $300,000 to Columbus businessman David Shelton. The three lenders hold the first, second and third mortgages on the club’s real estate, respectively.
A hearing to set deadlines for plans is scheduled for July, said club board secretary and attorney Will Cooper. The hearing will be heard by Bankruptcy Judge David Houston in Aberdeen.
The club filed its first plan on Aug. 1, 2011. It proposed the amortization of the secured debts over periods of time up to 15 years, depending on the creditor.
The plan stated the club’s “income is and will be sufficient to satisfy the Claims of Creditors as proposed in the Plan, especially when the leisure market improves with the general economy.”
The club’s plan also involved asking existing shareholders to invest an additional $2,500 each.
Bankruptcy law allows the secured credit holders to vote to accept or reject reorganization plans, and both the banks and Shelton voted to reject the club’s proposed plan.
Shelton made a written offer to purchase the club for $1.3 million on Oct. 14, 2011. When the club didn’t respond to his offer, Shelton included the same offer in his April 2012 club reorganization plan.
Through court documents, both Cadence and Shelton suggest liquidating the club’s assets — selling everything — as the best approach, especially in light of Shelton’s offer.
“I’m just trying to get my money back,” Shelton said. “I loaned (The Columbus Country Club) a personal loan of $300,000. I own stock in something that has no value as a stock owner.”
Shelton said he has talked to many people about the club’s future.
“Nothing has happened so I haven’t made any plans,” he said. “But I’ve talked to a lot of people. I don’t know what (the board) is planning to do because they haven’t sat down and talked with me. I’m just trying to get my money back, and if I have to bid higher, I will do so.”
Cooper and club board President Kirk Hardy said they have not spoken with Shelton about his plan.
“Right now if the creditors had to vote on his plan or on our first plan, they would take his plan,” Cooper said.
“I think the Country Club is important to the community,” Shelton said. “I was a member of the club for many years — way before all of this started.”
The club’s financial problems began in 2008 at the beginning of the recession. Hardy said the club lost about 120 members — about a third of its members — over an 18-month period beginning in October of that year.
“We thought we would regain a lot of our members when the economy got better, but it hasn’t happened,” Hardy said.
Shelton became a lien holder in May 2009 when he loaned the club $300,000 at 6.5 percent interest to help with financial woes resulting from the membership drop. According to the promissory note to Shelton, the club agreed to make monthly interest-only payments of $1,625 with the principal due in full on May 12, 2011.
“The $300,000 of Shelton’s was absolutely necessary to keep the doors open,” Cooper said.
As the club’s financial situation worsened, it engaged Neel-Schaffer, Inc. to assist with marketing the property for sale.
A bankruptcy disclosure statement, filed by the club, states only one bid was received after a through marketing process. Cooper said the offer was limited to the small parcel.
The club was left with about 230 members by March 2010. The club laid off six employees, cut expenses and sold stock to members of the club, raising much-needed cash for operating expenses and back taxes.
In an effort to re-brand itself and to generate revenue, the club began offering summer swimming pool memberships for $500 and nonmember use of the golf course for $35 per round.
Over the past six months, the club has gone through $6,000 to $15,000 of cash per month. Hardy said most of the expenses were related to bankruptcy and attorney fees that would not be present during normal operations.
The club’s most recent balance sheet, filed with the court on May 21 of this year, showed it had just over $61,000 in cash at the end of April.
“We employee about 25 people and we use local vendors — closing the County Club would have a big impact on the local economy,” Hardy said. “We are trying to keep this open for Lowndes County.”
“This club is an important part of Columbus,” Cooper said. “It’s where civic clubs meet, people get married — it is a vital part of our community.
“We have lowered the rates and made it affordable. It would be a travesty to lose the (Columbus Country Club). We want to save the club. Nobody sees it as if we are going to lose it next week and there are going to be apartments going up on the land.”