The Community Center was filled to overflowing Friday , 16 January, when residents gathered to hear suggested plan(s) for a resolution of the Mid South bankruptcy and its challenge for Fairfield Harbour. For those who were unable to attend the presentation, or who would like to review the presentation at their leisure, Board President Larry Knapp announced that a DVD of the presentation would be available for the nominal fee of $5 at the POA office in a week’s time. What is included here is a summary of what occurred at Friday’s Community Meeting. For details, please see the DVD.
Larry began the meeting with a brief comparison of Chapter 11 and Chapter 7 bankruptcies. (Please see FACTS Did You Know for a detailed description of the different forms of bankruptcy.) A business in Chapter 11 is given an opportunity to submit a plan for reorganization/restructure which may allow him to salvage his business. On December 21, Mid South’s plan was rejected by the judge, and both sides were directed to return to court on 25 February with a workable plan.
To date, Mid South has declined to work with the POA, so the POA will submit its own plan(s) in compliance with the court directive. FACTS asked its subscribers and the community in general to submit plans and ideas to the BOD. Thank you! 16 plans have been submitted thus far, and each of these will be examined carefully using these criteria:
- The plan(s) submitted must be practical, legal, and allow us control of our destiny.
- The plan(s) submitted must be acceptable to the bankruptcy court judge, to Wells Fargo (the primary debtor) and, in the end, to our community.
Once the judge and Wells Fargo accept the plan(s), the community will be asked to accept, or reject, as it did the Mid South plan. (Mid South does not get to reject any plan.)
NOTE: If you wish to submit a plan, you need to act quickly. It must be clearly identified and fleshed out in time for possible submission by mid-February.
Below, brief summaries of the plans submitted:
- *We do nothing and let the court decide. Return to court on February 25 and let the court decide.
- Mid South does nothing and we let the court decide. Be steadfast, BOD. Wait to see whether Mid South wants to reach a satisfactory resolution to the problem or let them go into Chapter 7.
Agree to pay a per property recreation fee IF Mid South uses the nearly $2 m it owes us to restore the clubhouse. Then we agree to a $300/yr recreation fee.
- Mid South and POA combine forces to restore the amenities, with transparency to insure that Mid South lives up to its responsibilities. Requires voluntary recreational fees from POA to be used only for Shoreline maintenance.
- Use “crowd-sourcing” to appeal to the anti-corporates for monies to purchase the amenities.
- Use an earlier SSC Land Use Study to allow limited development on the Shoreline property in exchange for restoration of the amenities.
- In a “land swap,” Mid South gives the clubhouse lands to the POA; the POA forgives Mid South debt to us, then razes and rebuilds the SL clubhouse.
- Give liability and retain profits. POA gets all Shoreline except marinas. POA builds new Community Center and Activity Center. MidSouth keeps other profit generating assets.
- Mid South gives all the amenities property to the POA, and both share revenues from those amenities’ usage fees for a specified period (Marinas are profitable, and the Harbour Pointe Golf Course is projected to turn a profit as of 2015.)
- Revenue sharing agreed SUM over time. Mid South gives all the amenities property to the POA, and both share revenues from those amenities’ usage fees unit agreed-upon amount is paid to Mid South.
- Mid South builds a $2mil (estimated) clubhouse where the present cart shed is, then is permitted to build between tennis courts and putting green. POA would lease clubhouse for 20 years. Mid South development efforts would be required to pay POA dues.
- Establish a Shaw Nature Conservancy and Recreation Center and charge property owners $300 annual usage fee to join and use Center.
- Community forms an LLC to purchase amenities; Shoreline gets walking trails; the POA shares a percentage of the revenues with the LLC until the LLC is repaid for purchase.
- LLC and revenue sharing. Community investors purchase amenities and give them to POA. BCG continues managing HPCG. Revenue percentage back to LLC until repaid.
- Chapter 7 and eliminate our lien. Jack Shaw gives $1.8mil to Wells Fargo. Mid South gives POA property and lien is removed. Mid South goes into Chapter 7.
- Chapter 7 and FH Benefactor Buyout. POA asks court to send Mid South into Chapter 7, and appoint a trustee; FH Benefactors buy and deed property to POA and receive return on investment through dues credits.
Gary Shipman, of Shipman &Wright, LLP, the attorney originally hired to collect the judgment we were awarded from Mid South, began by praising our POA Directors for leaving personal biases at the door and approaching the problem with expertise and professionalism. He understands, he said, the practical and legal issues we face.
Mid South’s expectations, he told us, were neither practical nor legal. Mid South, he told us, wanted a guarantee of income that could not materialize, and that it, the debtor, can not better its position in bankruptcy, yet that is what Mid South expects. Our restrictive covenants are legal and enforceable and can not be overturned. Federal courts can not overturn state law issues. All of Mid South’s arguments have already been rejected in the courts, he reminded his listeners.
He stressed that only through our participation will we have control over our own destiny. The Mid South problem has negatively affected our property values. The bleeding must be stopped; only then can we begin the restoration process. Restoration won’t come without some economic pain, but a return on our investment WILL HAPPEN. As a POA member, each of us has an ownership interest; each of us must be part of the solution. We must stop the blight of Mid South upon our community.
Mr. Shipman concluded by telling us that, although Mid South has continued to refuse to meet with us, meetings are being held with Wells Fargo, the primary creditor, and that until the judge accepts the POA plan(s), certain information would be held close, for strategic reasons.
Your FACTS Reporter