Governor Craig Benson, whose company sank millions of dollars into the now-insolvent Golf Club of New England, took over the "millionaires' golf course" at a bankruptcy hearing yesterday.
U.S. Bankruptcy Judge J. Michael Deasy verbally confirmed a bankruptcy plan calling for golf club's transfer to its largest creditor, Soft Draw Investments, LLC, a private company solely owned by the governor.
Soft Draw had a claim in the bankruptcy for $17 million, having had advanced the money to purchase land in Greenland and Stratham, plus the funds to construct the Arnold Palmer-designed luxury golf course and its turn-of-the-century-style stone clubhouse.
Appraisers put a market value of $12 million on the golf course, club house and additional land for house lots.
Bruce Harwood, attorney for Soft Draw, told the bankruptcy judge he had a check ready yesterday to immediately pay $63,000 in back property taxes to Stratham, plus 18 percent interest.
He said Soft Draw intended to pay Greenland $109,281 up front, pending resolution of a dispute over land boundaries and the amount of tax owed.
Soft Draw will also assume the leases for golf carts and equipment used to maintain the golf course.
The club, after operating for only one golf season, sought Chapter 11 bankruptcy protection on Feb. 19.
Greenland and Stratham had placed liens on the golf course late last year, and the clubhouse contractor, Channel Building Company, which has a $600,000 claim in the bankruptcy, had secured attachments on it.
The top-of-the-line golf course, whose initial members included the disgraced ex-CEO of Tyco International, Dennis Kozlowski, and other Seacoast corporate chiefs, didn't attract enough wealthy members -- at a $65,000 initiation fee plus $7,500 annual dues -- to pay the bills.
The members refused to put up the cash to cover the shortfalls, according to a director.
But the golf club was able to open for play on May 1 despite the bankruptcy, thanks to a cash infusion from Benson's company.
Under the bankruptcy plan, Soft Draw will pay 25 cents on the dollar to the food suppliers, florists, fish markets, trades people and agricultural vendors who were left unpaid when the club went under. The total to be paid the unsecured creditors is about $50,000.
Soft Draw is disputing Channel Building Company's priority as a creditor, and the $600,000 debt is the focus of a separate case in the bankruptcy court. If Soft Draw prevails, it will pay Channel 25 cents on the dollar, Harwood said, or about $150,000.
In filings in the bankruptcy cases, Channel's lawyers said the golf course directors kept upgrading clubhouse amenities and piling up expenses, when they should have known they couldn't afford them.
Neither Harwood nor the Governor's Office had an answer yesterday as to how much Soft Draw will have to spend to keep the golf course operating from now on.
The Governor's Office issued the following statement attributed to Benson:
"I am happy to say the situation surrounding the Golf Club of New England has been resolved. Today, a judge approved the purchase of the club by Soft Draw Investments LLC.
"Soft Draw has already paid all real estate taxes for 2003 in full including interest and is ready to move ahead. The new Golf Club of New England will continue to be a great asset to the communities surrounding it, both by providing revenue to the area and maintaining the pristine rural appearance of the towns."
As a co-founder of Cabletron, Benson is believed to be worth hundreds of millions of dollars, but the true extent of his wealth is not known. Nor is much known about Soft Draw, how it is funded, or the extent of its assets.
Assistant U.S. Trustee Geraldine Karonis said in a bankruptcy filing that the plan "provided little to no information concerning the financial ability of Soft Draw to acquire the debtor's assets on the terms provided in the plan."
"I don't see any money stacked up here," Judge Deasy observed facetiously.
"It's up there," said Golf Course of New England attorney Daniel Sklar, pointing up to the Hampshire Plaza law offices of Sheehan, Phinney, Bass and Green.
"It's virtually here," said Harwood, explaining that Soft Draw had electronically transferred $1,100,000 to cover costs of resolving the bankruptcy. It was also noted that $410,000 in escrowed golf dues will now be available.
Deasy said he was satisfied with the offer of proof that adequate funds were on hand.
Source: The Union Leader (Manchester N.H.)
