Wed August 7, 2013
Skybrook Golf Club, Charlotte Golf Links Owe Millions, Placed In Receivership
Two Charlotte-area golf courses in the troubled Carolina Trail golf group owe millions of dollars in unpaid loans and have been placed under control of a court-appointed third party, according to documents.
Foreclosure is a possible next step for Skybrook Golf Club in Huntersville and Charlotte Golf Links on Providence Road, as lender Hunting Dog Capital tries to retrieve nearly $7 million lent to the courses.
Both courses are operated by Carolina Trail Golf Partners. The company is managed by Jeff Silverstein, a California businessman who has faced complaints of unpaid wages, back taxes and lawsuits from vendors trying to recover money over the past several months.
The seven Carolina Trail golf courses also include Birkdale Golf Club, Highland Creek Golf Club, The Divide Golf Club, The Tradition Golf Club, and Waterford Golf Club in Rock Hill. Silverstein’s courses are some of the Charlotte area’s most prominent public golf venues.
The lawsuit filed last week against Skybrook and Charlotte Golf Links, also accuses Silverstein of improperly transferring more than $86,000 between May and July from the two golf courses’ accounts to other companies he controls.
Silverstein did not return a phone message or email seeking comment. He had not filed a response to the lawsuit as of Tuesday.
A golf professional who works at Charlotte Golf Links said he has been told memberships at the two courses there will become invalid, possibly as soon as this weekend. Memberships are advertised online for prices ranging from $1,495 for an individual, annual membership to $3,990 for a three-year, family membership.
When a company is unable to meet its obligations and is found to be insolvent, a judge can order it placed in receivership. A neutral administrator, called a receiver, is appointed to oversee the company’s business operations and property.
Andrew Bolnick & Associates was appointed receiver, and Billy Casper Golf Management, a Virginia-based company, has been hired to oversee operations at the golf courses for now.
“We’re getting our arms around the situation,” said managing director Rich Katz of Billy Casper Golf Management. He said the company’s role is to “stabilize the Skybrook and (Charlotte Links) golf courses and better position them in the marketplace going forward.”
Katz declined to comment on what will happen to memberships at Skybrook and Charlotte Golf Links.
A hearing is scheduled for Wednesday morning in Mecklenburg County Superior Court to determine whether to make the two courses’ receivership permanent, a likely prelude to a foreclosure sale.
Financial troubles detailed
In March 2012, Skybrook and Charlotte Golf Links took loans from Hunting Dog Capital, a San Francisco-based firm that typically makes loans of several million dollars to finance acquisitions and other business activities. The loans totaled $6 million.
According the lawsuit, both courses defaulted on their loans in November by failing to pay interest. In January, the courses and lender entered into a loan modification, but in March, the courses failed to pay interest on their loans again.
The courses modified their loans again and agreed to pay additional fees and put their property up for sale, according to the lawsuit. And they agreed to deposit all revenue from Skybrook and Charlotte Golf Links into lender-controlled deposit accounts daily.
“Since March 2013, the (golf courses) have continuously disregarded the terms,” the lender said in the lawsuit. “Instead, the companies have continued to deposit revenue into deposit accounts ... other than the existing account and are making disbursements from the unauthorized deposit accounts without seeking authorization.”
Between May and July, at least $86,020 was transferred from the golf courses’ accounts to other companies controlled by Silverstein or his employees, according to the lawsuit. That includes $40,000 to a holding company called Carolina Trail Golf Partners, $7,000 to Twin Creeks Golf Club in Dallas, which is controlled by Silverstein, $7,000 to an executive at Twin Creeks and $32,000 to a Carolina Trail Golf Partners employee.
A dozen checks, which appear to be signed by Silverstein and range from $900 to $21,000, are included in the case file.
In spite of the defaults, it appears Hunting Dog Capital continued to lend Silverstein’s companies money. On July 9, the company agreed to lend Charlotte Golf Links $16,666 as a cash advance to cover rental payments. And on July 22, the lending company advanced Charlotte Golf Links $75,389 to cover local property taxes it couldn’t afford to pay, according to the lawsuit.
An email from Silverstein to Hunting Dog general partner Todd Blankfort, dated July 22, said that Charlotte Golf Links would repay the property tax loan, “either out of operating cash flow and/or an investment that a new partner makes,” according to the lawsuit.
Neither loan has been repaid, the lender says.
In Mecklenburg, York and Union counties, property records show Silverstein’s companies own more than 845 acres, with an estimated value of $26.7 million. That figure doesn’t include The Tradition or Charlotte Golf Links courses, which are operated by Silverstein-affiliated companies on leased land.
The Carolina Trail courses have run into a series of financial troubles this year. In January, the U.S. Department of Labor announced that the Carolina Trail courses had repaid $758,465 in back wages owed employees after an investigation. Employee complaints about unpaid wages have persisted, however, and the Labor Department has told the Observer it has an ongoing investigation into pay practices at the courses.
Birkdale Golf Club was briefly shuttered last month after it failed to pay $64,990 in state taxes. The course reopened after it paid the taxes.
But problems persist.
Court records show PNC Equipment Finance sued the Birkdale club in June, seeking to repossess $240,000 worth of maintenance equipment and collect monetary damages of $232,613. PNC also sued Skybrook for equipment worth $200,000 and damages of $158,681. Both cases are pending in federal court.
Tax liens filed in Mecklenburg County show Charlotte Golf Links owes $28,448 in unpaid federal taxes and $13,673 in state taxes, and Skybrook owes $30,896 in state taxes.
Other suppliers are also seeking to be paid for work they claim the golf courses owe them. In March, New Life Turf filed a lawsuit against Skybrook and Charlotte Golf Links, after the turf company said it wasn’t paid for installing $140,000 worth of Diamond Zoysia grass. The turf company claims it was only paid $40,000, and a $36,083 check to pay for part of the remaining balance bounced. Observer staff researcher Maria David contributed.