Get ready for a duel for one of the biggest prizes in Indianapolis golf—ownership of the Hawthorns Golf & Country Club.
The course within the Hamilton Proper residential development in Fishers landed in bankruptcy court in January, three months after HGCC Lender LLC filed a $4.8 million lawsuit seeking to foreclose on the 279-acre property.
When IBJ wrote about the foreclosure case in October, the identity of the players behind HGCC Lender—which bought up the troubled Hawthorns loan at a discount last year—was shrouded in secrecy.
But now it turns out that HGCC is an affiliate of Newport Beach, Calif.-based Concert Golf Partners, which owns seven private golf clubs around the country and is looking for more.
Concert Golf this summer plans to file a bankruptcy reorganization plan that swaps its debt for equity, paving the way for more than $1 million in capital investments that would restore the Hawthorns to its former glory, Chairman Peter Nanula said.
“You have a lender who happens to have top-notch operating skills,” he said. “We hope to be part of the long-term solution.”
But the current owner, affiliates of HDG Mansur CEO Harold Garrison, isn’t rolling over, despite the Indianapolis developer’s well-documented financial problems.
The firm in bankruptcy, Hamilton Proper Golf Partnership LP, plans to file its own reorganization plan that calls for retaining ownership, said Deborah Caruso, a partner at Dale & Eke representing the company. Under that plan, existing owners and “others” likely would contribute additional capital, Caruso said.
“It’s the owner’s intent to reorganize and present a plan that is favorable to the creditors and existing members,” she said. “It has been open since the early ’90s, and the plan is to keep it open for years to come.”
In court papers, Hamilton Proper Golf Partnership valued the country club at $6.5 million, substantially more than HGCC Lender’s secured debt. But the company also has many unsecured debts, including more than $10 million owed to current and former members. Much of that is due former members who were entitled to refunds of their initiation fees but haven’t gotten the money.
Garrison is fighting to keep hold of The Hawthorns at a time his real estate empire is teetering.
Last month, two HDG Mansur affiliates filed for Chapter 11 bankruptcy in an attempt to fend off a $5.8 million court judgment awarded to an overseas investment fund that accused Mansur of pocketing fees it did not earn.
In the wake of that judgment, Preet Bharara, the U.S. attorney for the Southern District of New York, has launched a criminal probe targeting HDG Mansur, IBJ reported this spring.
Meanwhile, HDG Mansur is set to lose ownership of its highest-profile Indianapolis property, the 30-story Market Tower downtown. After HDG Mansur defaulted on more than $60 million in loans, a judge in May ordered the property sold at sheriff’s sale.
Creditors in the Hamilton Proper Golf Partnership bankruptcy will vote on the competing reorganization plans, which are expected to be filed by the end of the month.
The Hawthorns’ members, who are represented in the bankruptcy through the Unsecured Club Members’ Committee, are in discussions with both parties and have not yet taken a position on which plan to support.
Members want to be sure whoever prevails invests in repairs and improvements that were put off in recent years as financial pressures mounted, said Richard Block, who lives along the first hole and is chairman of the members’ committee.
The needed work includes replacing and repairing cart paths, addressing water leaks in the clubhouse, repairing the maintenance barn, and upgrading the weight room, said Block, president of local developer Paragon Realty.
Block said Garrison’s financial problems are a concern. But members are reserving judgment until they see the financial underpinnings of the plan his attorneys submit.
“What we don’t want is to get into a new financial structure … and find ourselves at the same point in 18 months,” Block said.
Nanula expressed confidence Concert Golf’s plan will stack up favorably. He said the Hawthorns would emerge debt-free and with ample cash to pay its bills, make meaningful payments on debts to members, and immediately fund more than $1 million in improvements.
“The other plan cannot reliably offer any of those four things,” he said.•