The bidding process for the Federal Club has begun, just not quite in the way auctions normally proceed in bankruptcy court.
A major real estate developer has outbid a group of club members to become the default, or “stalking horse,” bid for a distressed bent grass golf club and several dozen unsold home lots in Hanover County.
The owners of the club have been in bankruptcy protection since last fall.
For several weeks, a group of members thought it was close to being the stalking horse bid with an offer of $2 million for the course, which cost about $8 million to build. On Tuesday, a lawyer for the member group – called the New Federal Club – pleaded their case to the bankruptcy court and said a deal was very close but for a few details.
A “stalking horse” bid is the first bid, and, if nobody bids higher, gets the asset at the agreed-upon price.
Now a stalking horse deal looks imminent with Bob Atack, a longtime real estate developer in Richmond who also recently got involved in Magnolia Green, a planned community in Chesterfield County that was in foreclosure and that also hopes to also have a golf course.
Atack’s bid for the entire Federal Club and 27 unsold lots – a total of about 587 acres, according to Hanover County land records – is about $3.5 million, according to a source close to the deal. Atack declined to confirm that figure. His attorneys have produced a 40-page offer that lawyers from the Bank of Essex and the lawyer for the debtors are reviewing.
The case will go before the bankruptcy court again Tuesday, April 27, perhaps for approval of the stalking horse bid.
Atack has also reached out the member group he outbid and he said he wants to maintain the golf course while he focuses on real estate.
“We are looking to do something that might parallel their plan,” he said. “A private/public course [would accomplish that] and be able to add value and add credibility to the asset.”
The stalking horse bid is just the start of the auction process. The Bank of Essex, which is owed more than $8 million and has not collected an interest payment in months, will market the course to drum up interest and hopefully entice higher bids. That’s because the bank’s wants to recover as much money as it can.
Meanwhile, owners Ray Tate and Richard Laibstain are still looking for a last-minute investor. The club has added about 40 members since January, Tate said, bringing to total to around 180. Tate has previously said the original planned predicted a stable business with 300 members.
Aaron Kremer is the BizSense editor. Please send news tips to Editor@richmondbizsense.com.
Richard & Ray once again screwed the members. We believed in Ray and the club, but we lost tens of thousands of dollars (millions) of our investment because of sheer incompetence.
We were screwed again by them not signing our contract, thus forcing us to pay a large attorney bill.
Thanks Richard & Ray…
The Federal Club is without a doubt the most poorly planned business venture ever created. You have two individuals calling the shots living high on the hog, who have no idea which way is up and which way is down.
Arnold Palmer and the Bank of Essex get an “F” for doing their homework on this project and who was working within it. I am personally disgusted and feel terrible for the people who bought into two couch potatoes waiting for a business to succeed.
I love how Mr. Tate is still holding out hope for a last minute investor. I think I am going to build a rocket ship and fly to the moon tomorrow as well. It might be a better investment.
Mr. Tate and Mr. Laibstain—-What goes around comes around.You have taken down two great families fortunes by your poor decisions, lies, and deception. You have a lot of sleepless nights ahead, and hope the truth will finally come around.
Well, obviously nobody would want to be in this predicament, however with the way the economy has taken a toll for the worse, a lot of people and businesses have been suffering tremendously, especially real estate.
Personally, I do not believe that Mr. Tate nor Mr. Laibstain went into this investment thinking “Let’s see how long it takes for us to mess this up and hit rock bottom!” Im sure they wanted nothing but positive outcomes, so why all the negative talk? Obviously, whoever invested in this saw something good, wanted their names attached too, and jumped on the bandwagon…now Mr. Tate and Mr. Laibstein are liars, they make poor decisions, and they are incompetent?
Having a business like this is tough work and not everyone can handle the stress and amount of time you have to invest into it. I think that the incompetent ones are the people who sit on the sideline and wait for someone to start a business like this and then want to reap the benefits from the “family fortune”.
In conclusion, Mr. Tate and Mr. Laibstain- You all were strong enough to go out here and start your own business and that says enough right there. From what I have heard, you all are strong working men and have been successful in everything that you start. It just sucks that you have so many people trying to see you all fall because they are miserable with what they are NOT doing with their lives and they were looking at YOU as an easy way out. Just take these poorly written comments as ammunition to continue to do your best and make sure that you watch the company that you keep while doing so. Continue to get your beauty sleep at night and rest those busy minds.
Again, the economy has taken a turn for the worse and you all just happen to be one of the millions of people who are suffering from this. It’s only a matter of time that things will pick back up and things will get better. Let’s see how many people are willing to start their own “family fortune” instead of spending their “productive” time blogging and complaining about what you all are not doing with YOURS. Sounds like jealousy to me…
Mr. Tate is indeed to be noted in this article,after all he did spend the fortune he worked all his life building into this venture.He had a dream and he set out to build on this dream for himself and his family. Mr. Tate sitting waiting for a business to succeed? Is that what you call it when you go to work every single day early and come home late and never once ask any more of any single person than you are willing to give yourself plus some. The younger generation might learn some things from the likes of Ray Tate. To mention a few the value of PRIDE,INTEGRITY and What it means to give your word and stand by it. Ray Tate did not ask for a hand out and is not guilty of anything wrong. He did not walk away from this and try to not fix anything,he merely asked for time to rebuild. The folks that know Ray Tate believe in him and his dream and are willing to stand behind him and with him. The folks that never knew Ray Tate call him a couch potato and were perfectly willing to spend his fortune on their desires. By the way,good luck with that rocket ship is that your fortune you are wasting or one that another individual worked for with blood sweat and tears?
As someone who knows Ray Tate personally both comments here are far off base. He didn’t sign the contract because it would have hurt the members and drastically changed the club. I find it funny that you two sit on your high horses and judge his decisions as incompetent because he didn’t sign the first deal that was offered and instead considered what was best for the members of the club.
Ray’s a good guy, but he’s a bit confused on this if that’s what he told you. That offer was actually from the members. It also made no big changes to the current course setup or ops. Why would the current members want to do any of that?