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Sportsquest Sold

C ctandc500+ posts
http://www2.timesdispatch.com/...-will-ho-ar-1935441/

“However, one member of the county's governing body expressed reservations about the sale.
Dale District Supervisor James M. Holland is still assessing the transaction, but based on the sale price, said it might have been beneficial for the county itself to have purchased SportsQuest.
"It was well worth considering," said Holland, who has long been an opponent of the SportsQuest deal. "When the lease is up, you can bet your bottom dollar … that you're going to pay a whole lot more."
So why didn’t they even entertain offers to possibly buy it?
Sale price was $5 million.
First time I’ve personally seen the numbers, as far as Chesterfield county is concerned.
$4.3 million invested to lease the use the of the nine multipurpose fields for 20 years and for a senior center and gym (which never got built). Supposedly Sportsquest has to pay the county $2 million if the senior center and gym aren’t built by the end of year. How’s that going to happen? They are officially bankrupt?
Also, the County has use of the fields Monday through Thursday and ONE weekend a year.
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Midlo DadMidlo Dad10,000+ posts
Shaw was only willing to bid up to the amount they themselves were owed. Had they sat back and had SQ default to the county, a county foreclosure would have wiped out any hope Shaw had of ever seeing any of its money. This way, Shaw will try to operate the place in the black for a while in hopes of someday recouping some of its losses. Bet on them spending most of their time trying to find someone to buy them out.

As for the county, $5 million would have bought them the project subject to their own prior lien. To cover acquisition and also their own interest, they would've had to put up a lot more. This way, the county can continue to use the facilities per its lease for as long as Shaw can keep it afloat. And the county remains in the catbird seat if Shaw's efforts collapse; everyone has to make the county happy or else it lowers the boom.

And the property might not be worth a lot more in a few years. Astroturf has to be replaced every so many years. Someone is going to have to pump capital into that place every so often. If no one does, the county might not want possession of it when the time comes. It might prefer to foreclose and sell to the highest bidder.

It's unfortunate that one of the supervisors is so inept at understanding the transaction. Kudos to Dan Gecker on this one. Good thing for us taxpayers that Holland didn't run this deal.
Midlo DadMidlo Dad10,000+ posts
And yes, I would assume that at some point SQ will be in bankruptcy one way or another.

I wouldn't be suprised if Burton were sued (or worse) personally as well. For one thing, the way he sold "SportsQuest shares" sure looks like an unregistered security to me. For another, his blurring of the lines and finances between the tax-exempt foundation and the for-profit business stinks to high heaven. His recent comments that he stopped paying himself in November were also interesting; how much did he pay himself until that point to captain the sinking ship? Somebody who lost their shirt is going to want to know the answers to these questions before long.
C ctandc500+ posts
quote:
Originally posted by Midlo Dad:
Shaw was only willing to bid up to the amount they themselves were owed. Had they sat back and had SQ default to the county, a county foreclosure would have wiped out any hope Shaw had of ever seeing any of its money. This way, Shaw will try to operate the place in the black for a while in hopes of someday recouping some of its losses. Bet on them spending most of their time trying to find someone to buy them out.

As for the county, $5 million would have bought them the project subject to their own prior lien. To cover acquisition and also their own interest, they would've had to put up a lot more. This way, the county can continue to use the facilities per its lease for as long as Shaw can keep it afloat. And the county remains in the catbird seat if Shaw's efforts collapse; everyone has to make the county happy or else it lowers the boom.

And the property might not be worth a lot more in a few years. Astroturf has to be replaced every so many years. Someone is going to have to pump capital into that place every so often. If no one does, the county might not want possession of it when the time comes. It might prefer to foreclose and sell to the highest bidder.

It's unfortunate that one of the supervisors is so inept at understanding the transaction. Kudos to Dan Gecker on this one. Good thing for us taxpayers that Holland didn't run this deal.



Thanks for the input. But unless I'm reading the tax records wrong, the property itself was worth $7 million.
C ctandc500+ posts
quote:
Originally posted by Midlo Dad:
And yes, I would assume that at some point SQ will be in bankruptcy one way or another.

I wouldn't be suprised if Burton were sued (or worse) personally as well. For one thing, the way he sold "SportsQuest shares" sure looks like an unregistered security to me. For another, his blurring of the lines and finances between the tax-exempt foundation and the for-profit business stinks to high heaven. His recent comments that he stopped paying himself in November were also interesting; how much did he pay himself until that point to captain the sinking ship? Somebody who lost their shirt is going to want to know the answers to these questions before long.


It's going to get ugly, that's for sure.

I wonder how much of that $5 million will be eaten up by liens already on the property?
Midlo DadMidlo Dad10,000+ posts
There are three different numbers.

Tax assessment -- not the best measure of actual value. Just used to determine your bill from the county. Developed by assessors but not by certified appraisers. Can be challenged if you don't like your tax bill, otherwise generally not considered an acceptable indication of actual value.

Market value -- determined for a commercial property primarily according to its projected net revenue stream (assuming that revenues would exceed projected expenses) plus residual value of the land (after deducting the cost of removing any white elephant improvements).

Debt owed -- what people try to strategize a way to recover. If market value is sufficient, simply foreclosing and collecting from the foreclosure buyer works. When there is reason to believe no one will bid enough to take care of you, though, you start looking for more creative and more involved strategies.

Lots of work for all my brethren at the bar.
keewartkeewart10,000+ posts
quote:
Originally posted by ctandc:
[I wonder how much of that $5 million will be eaten up by liens already on the property?


From the prior posts, it looks like Shaw Industries had the more superor lien therefore bidding to protect their interest. Question: are the other suborinate liens 'wiped clear' after the foreclosure sale like other foreclosure sales? Just wondering if this situation is different in some way. Can those that are still owed money again put liens on the property or is this when they sue to try to recoop money due?
Midlo DadMidlo Dad10,000+ posts
Well, I usually charge a pretty penny for this sort of advice!

But the answer is, it's complicated.

Shaw had the second financing (deed of trust) lien on the property. Chesterfield's was recorded afterwards but Shaw subordinated to Chesterfield, a concession to its customer that it probably now regrets but let's face it, the whole thing was a no go without the county's involvement.

In cases of new construction, a subcontractor or materials vendor can claim what is called a mechanic's lien. Those liens have priority over the previously filed liens with respect to improvements, but they are behind the prior liens with respect to the residual value of the land.

Shaw's foreclosure will have the effect of wiping out subordinate liens like judgment liens and the aspect of mechanic's liens that attaches to the land value. But the county's lien is still there, ahead of Shaw's, and the mechanic's liens for new improvements are ahead of both of them at least to the extent the improvments continue to have value.

Clear as mud, right?

It makes for quite a mess when a project implodes. Lots of work for guys like me.
Last edited by Midlo Dad
Midlo DadMidlo Dad10,000+ posts
quote:
Doesn't the trustee of the bankruptcy proceedings have to approve everything still or is that a done deal?


If SQ files for, or is forced into bankruptcy, the trustee will have the right to assert SQ's equity rights but could well abandon the property given that the liens far exceed its auction block value. The trustee cannot simply dispose of the liens. Even in bankruptcy, the lien creditors come first.

Which is probably why no one is bothering to file bankruptcy. Once you take away the real estate, what assets are there really? You'll have a pile of liabilities and nothing to pay them with.
Last edited by Midlo Dad
Midlo DadMidlo Dad10,000+ posts
quote:
Is there any recourse for those that paid for memberships to the the health/fitness center?


Those consumers are going to be unsecured creditors. In all likelihood they will get nothing from SportsQuest.

Their one hope would be if the Attorney General's office took up the sword for them in a suit seeking to hold Burton personally liable. That would take some doing but I could see things heading in that direction.

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