Monday, Dec. 22, 2008 | 4:06 p.m.
Beyond the Sun
A federal Bankruptcy Court judge agreed in principle today that one of three golf courses at Lake Las Vegas should be closed to help the development's dire financial situation.
The resort, which has been going through bankruptcy reorganization since July, owes more than $15 million on The Falls, the golf course along the resort's entrance, Lake Las Vegas Parkway. Managers at Lake Las Vegas said the course is worth less than half that, and is burdened by $6 million in liens.
Resort managers had asked the court to allow them to abandon the course and allow it to be foreclosed on so that they could use the money they are losing on it elsewhere in the resort.
U.S. Bankruptcy Judge Linda B. Riegle agreed, but delayed a ruling until January so that resort managers can come to an agreement with golf course creditor Carmel Land and Cattle Company to figure out what to do with an unfinished pump station on the golf course, which future development may need.
"Quite frankly, I was skeptical when this case started as to how in the world we would keep three golf courses running," Riegle said.
By abandoning the course, Lake Las Vegas would allow Carmel to foreclose on it. It was not yet known what Carmel would do with the course.
Frederick Chin, president and CEO of the Atalon Group, acquired Lake Las Vegas in January after the resort's developer, the Transcontinental Corp., defaulted on its loans and the project entered foreclosure.
Attorneys for the resort said The Falls is expected to lose more than $1 million between August 2008 and July 2009. Attorney David Stern said Chin and his associates "simply want to stop hemorrhaging."
"This is a golf course that does not make money, even without any debt service," Stern said. "This is a situation that is a constant struggle just to break even."
Representatives from the Transcontinental Corp., which still retains an interest in the resort's Ritz-Carlton Hotel and owns several parcels of undeveloped land at Lake Las Vegas, had vehemently objected to the request to abandon The Falls.
John Plunkett, senior vice president at Transcontinental, questioned the accounting behind the projected $1 million loss, but said that the true value of The Falls is in the sense of entry it provides for the resort, its importance to hotels like the Ritz-Carlton and the view premiums that it allows home builders to charge.
"Irrespective of the numbers, I think that closure of The Falls has imminent and far-reaching impacts on the resort that I don't believe have been adequately considered," he said.
The Ritz-Carlton has an exclusive play agreement with The Falls and, though the hotel is going through foreclosure, Plunkett said he believes it will re-emerge under new ownership and that it will need the golf course to be successful.
Riegle said she agreed with the argument made by Lake Las Vegas attorneys that The Falls had become a burden to the resort and that it had little or no real value, thereby meeting the statutory requirements for it to be abandoned under bankruptcy law.
But before she could make the official ruling, Riegle said, Lake Las Vegas and Carmel have to figure out how to ensure that the pump station, which sits on a piece of property that includes a significant chunk of The Falls, fits into the resort's future and if the station needs to be left in the resort's control even after the land around it is foreclosed on.
Chin said he is working on an agreement with Carmel to trade a resort-owned driving range that is next to The Falls to Carmel in exchange for the pump station, but that nothing has been decided. He also said that if all else fails, the city of Henderson would be able to seize the pump station to provide services to future homes.
Riegle said the issue would have to be fully resolved before she would grant the abandonment. A hearing about the pump station parcel is scheduled Jan. 15 at 9 a.m.
Jeremy Twitchell can be reached at 990-8928 or [email protected].