Hawthorns Golf plan of liquidation confirmed, asset purchase approved

By Kali Hays

New York, Oct. 29 – HGCC Lender, LLC, the secured creditor of Hamilton Proper Partners Golf Partnership, LP, which does business as Hawthorns Golf & Country Club, won confirmation of its Chapter 11 plan of liquidation, according to a Wednesday order from the U.S. Bankruptcy Court for the Southern District of Indiana.

Another order approved HGCC as the buyer for substantially all of the company’s assets, a sale that is expected to close by the end of the week.

HGCC’s stalking horse bid was the only qualified bid received for the assets, according to the lender.

As previously reported, the bid includes a $5.5 million cash component, of which $5 million will be paid via an offset/credit against the HGCC secured claim if that claim is still outstanding and paid in cash if not, plus a $500,000 cash payment, plus value equal to the replacement of initiation fee refund rights to members, plus value equal to the amount of pre-paid credits honored, plus value equal to the assumption of assumed contract and lease liabilities, plus the value of a projected $1.34 million capital improvement commitment.

The court also granted HGCC’s request that the court assist it and a plan agent in the closing of the sale by prohibiting Hawthorns from removing any assets from the clubhouse and ordering cooperation with the ownership transition under a separate Wednesday order.

The order also allows a plan agent to change the locks and alarm codes at the clubhouse and related facilities, to hire a security service, if deemed necessary, and to terminate the Hawthorns employees and their rights and benefits in connection with the sale closing.

Plan details

As previously reported, Hawthorns and HGCC filed competing plans and related disclosure statements for the company in July, with both disclosure statements receiving approval on Sept. 26.

Hawthorns withdrew its reorganization plan on Oct. 16.

HGCC intends to operate the assets as a private golf club providing current members and resigned members of the existing club rights and benefits in connection with the new club, depending on the terms of the final asset purchase agreement.

HGCC said these benefits could include the ability to exchange current unsustainable deposit refund rights for a new, more sustainable deposit refund right under new club membership documents.

The HGCC plan also calls for the appointment of a plan agent to complete the sale and administer the plan.

Specific terms under the HGCC plan include the following:

• Administrative claims, priority tax claims and priority unsecured claims will be paid in full;

• Holders of secured tax claims are expected to recover 100% through assertion of statutory collateral rights;

• Holders of equipment lessors’ secured claims will retain their liens or interest on the equipment securing the claim;

• Golden Investment VIII, LLC will retain its security interest in the member obligations, be entitled to retain any installments received by the company on member obligations and remitted to Golden in accordance with the cash collateral order as a credit against its claim and receive any collections on the member obligations being held by Hawthorns, which will be paid over to Golden. In addition, member obligations will be transferred to Golden;

• Holders of club member claims will receive a share of net available funds after payment in full of senior claims, in addition to their right to exchange their initiation fee, receive a refund of a portion of initiation fees on a sliding scale and become a member of the new club;

• Resigned members who join the club within 90 days can do so with no initiation fee. Resigned members will also share in the company’s net available funds;

• Holders of general unsecured claims and class 10 insiders claims will share in the net available funds; and

• Holders of interests will receive no distribution.

A minute entry from the court entered Oct. 23 said that the confirmed plan is expected to take effect by Nov. 10.

Hamilton Proper, which does business as Hawthorns Golf & Country Club, is the Indianapolis-based owner of private membership golf club Hawthorns. The company filed for bankruptcy on Jan. 24, 2014. The Chapter 11 case number is 14-00461.

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