The economy is affecting country clubs, too. After last year’s Wall Street meltdown, country clubs have been hard hit.
Long Island country clubs have been dealt an especially hard blow as many of Bernie Madoff’s investors reside here, and after they have lost big bucks, they no longer have the necessary funds to pay for luxuries like five-figure country club membership fees.
The Woodcrest Club, Inc., located in Syosset, New York, filed for Chapter 11 relief on December 10, 2009 in the United States Bankruptcy Court for the Eastern District of New York, in Central Islip.
The club’s membership dropped down to just 125 members, from about 300 this past summer. The Club, which is on 107 prime acres on Long Island’s North Shore, has more than $1 million in unpaid vendor bills and employee wages.
The club also incurred large debt from a recent multi-million renovation of its facilities. To compound the club’s problems, its mortgage contains covenants that are cost prohibitive to incurring subordinated debt or re-financing outside of bankruptcy.
Club Member is a White Knight in this Chapter 11 Bankruptcy
One of the members came through as a white knight to try to rescue the club. John Bennardo, a general contractor and resident of Cold Spring Harbor, who’s been a member since 2002, agreed to lend the club, as a debtor-in-possession, about $2 million. In doing so, he would also become the Woodcrest Club’s general manager and run it for at least five years. Bennardo is the owner of Manhattan-based Legacy builders.
The case is pending under Case No. 09-79481 before Judge Dorothy T. Eisenberg. The debtor’s attorney is Gerard R. Luckman of the SilvermanAcampora LLP firm in Jericho, New York. This is the firm of Long Island Chapter 7 trustee Kenneth Silverman.
Technically, the debtor is a non-profit, member-owned corporation. The debtor currently employs twenty-seven employees and has five officers.
The Debtor holds title to approximately 107 very desirable acres of real property in the exclusive Village of Muttontown, with a current approximate value of $18,000,000.
The Debtor’s Liabilities Include Taxes Owed to Uncle Sam From a Hole-in-One Contest
The Debtor’s liabilities total approximately $9,787,000, of which approximately $57,341 is for priority unsecured vacation pay, and approximately $12,900 of withholding taxes owed to the Internal Revenue Service from a hole-in-one contest winner — perhaps the most unusual debt I’ve come across in a bankruptcy proceeding in quite some time.
There is approximately $6,624,000 owed to secured creditors. The balance is owed to general trade creditors, arrears on equipment leases, and members that have already paid toward 2010 dues.
At the time of filing, there were four pending actions against the debtor, with the following parties as plaintiffs: (i) Wheatley Bakery 2 Inc.; (ii) Sigis Pastry Shop; (iii) Encore Events; and (iv) Big Z. Beverage.
The Meeting of Creditors is being held on January 5, 2010 in Room 561 at the Central Islip Bankruptcy Court. Hearings on post-petition financing and first-day orders occurred earlier this week. An order authorizing the payment of pre-petition employee wages was signed today. A status conference before Judge Eisenberg is scheduled for January 14, 2009 in Courtroom 760.