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TRUSTEE NAMED FOR THE RESORT!
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POSTED 4/03/2009
A big thank
you to our friends at the Melrose POA for passing this information along.
A court-appointedChapter
11 Trustee has taken over operation of the Club/Resort in place of the Dixons. Mr. Bob Onorato, the Trustee, met with
several members of the Board of The Melrose Club, Inc., as representatives of all members, lastThursday.
Those
of us who were at Thursday's meeting came away with very positive
feelings. We believe that Mr. Onorato has a good
understanding of what
needs to be done to first bring the Club's facilities back into good
condition and then to begin
to renew operations of at least some of the
facilities that are currently shut down. The Trustee immediately retained
a
new security company to ensure that all of the facilities in Melrose, Bloody
Point and Melrose Landing are safeguarded.
He has already commenced
discussions to get a ferry service operational, and is aware that Club
members, Residence Club
owners, owners of properties that are offered on the
rental market, and other interested parties are all anxious to see
the
Melrose golf course, the pool complex and at least one food & beverage venue
opened as soon as possible.
It
appears that even the most optimistic view suggests that it may be at
least a month before the Melrose golf course can be reopened. Mr. Onorato
explained to us the process he
must go through in order to obtain the
bankruptcy court's approval to spend monies, and even before he can approach
the
court with a plan he must first complete negotiations with the two
lenders that expressed a willingness to lend money to
the entity. Once the
loans are in place, the Trustee will then request sufficient funds to
perform necessary maintenance
on the golf course, the pool complex and the
restaurants, among other things, to get them into a condition that will
allow
for them to be reopened. In addition, Mr. Onorato fully appreciates
the urgency to have repair work performed on
the bulkhead (seawall) along
the golf course, and will include monies for that in his request from the
court.
He also understands the need to allocate some funds to maintain the
Bloody Point golf course, even though there may be
no plans to reopen it in
the near future.
Those of us who are closest to all of the activity are feeling very
optimistic
about the future. There is still a lot to be done on the legal
front, and there may be many more months of less than
full service along
with some stress, but we believe that we are now heading in the right
direction. We want to
work cooperatively with the Trustee and others to
make the Club & Resort (and the whole island) the wonderful place
that we
know it can and will be.
Daufuskie resort lays off remaining staff, closes it doors
By
MICHAEL WELLES SHAPIRO
Published Wednesday, March 18, 2009
The Daufuskie Island Resort & Breathe Spa closed
its doors this week, laying off what was left of its skeleton staff.
A bankruptcy judge ruled Tuesday that a trustee
will be appointed to manage the resort, which could lead to a reopening. A trustee has not yet been named.
"It could
be two days or two weeks until a trustee is picked and the resort's back in business," said Russ Brown, chairman and CEO of
RBC Enterprises, which develops and sells real estate at the resort.
Brown said owners Bill and Gayle Dixon of San
Francisco shut down operations and relinquished control of the club, the latest twist in a complicated bankruptcy case that
started in January.
As a result, the Melrose Inn, the Melrose golf course/club house, and ferry operations from Salty
Fare on Squire Pope Road on Hilton Head Island have been closed.
In another development, the bankruptcy judge ruled
last week that the Dixons could not sell or lease portions of the resort without the consent of a select group of resort members.
Rich Silver, a member involved in a lawsuit against the resort, and Brown both said a lender was willing to give the
Dixons money but only if the bankruptcy judge allowed them to sell or lease its assets freely. The judge would not allow that.
"As a result of this ruling, the one lender that was willing to lend (the Dixons) monies to keep operating is no longer
willing to make that loan," wrote Silver.
Brown said that after the lender pulled out, the Dixons agreed to let the
court appoint a trustee.
Brown said having a trustee manage the resort is good news for everyone involved, including
the Dixons' creditors.
"It means an independent party, not tied up emotionally, is selected to move forward the resort,
which allows the best possible chances for the creditors ... to be paid back," he said.
Brown and Silver said they
hope to see the resort, and in particular the popular Melrose golf course, open once a trustee is selected. "Hopefully, a
trustee will be appointed immediately and that trustee can take over very quickly and ensure that at least minimal operations
are resumed," Silver wrote.
Brown said the sooner the trustee is named, the better.
Neither the resort members'
attorney, Alexander Beard, nor the Dixons' bankruptcy attorney, Ivan Nossokoff, returned phone calls for comment.
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Ross Lysinger of the Daufuskie
Island Ferry Company explains his company's plan in the wake of the Bankruptcy.
Congrats on a good site and a good line of communication. Thought you might
like a ferry update. We were caught off guard at the start of our business by the drastic reduction in employee/ contractor
ridership - 2 days after we started! The subsequent near total shut down of the resort, negative press (all of local area
thinks that everything is closed on daufuskie), and then the chapt 11 -devastated our business plan and finances. We have
had insurance bound on all property and vessels since last Thursday, but have been precluded by Daufuskie Island Properties (DIP)
from operating. We have taken this time to successfully secure additional funding to operate under a new business plan that will work in the present
situation. Both DIP and DIFC have agreed that it is in everyones best interest for DIFC to resume a solid ferry schedule.
We will do so once we have satisfactorily (for both parties) concluded our present discussions. We apologize for any inconvenience,
but in the long term this will be good for all.
Sincerely,
Ross Lysinger
Daufuskie
Island Ferry Company
RICHARD
McGRATH’S E-MAIL TO DAUFUSKIE RESORTS
From:
Richard McGrath
Sent: Thursday, February 05, 2009 9:55 AM
To: susan.jones@daufuskieresort.com; bill dixon; dick roberts;
joe@lowcountryjoe.com; meljack@hargray.com; Mitch Evans; rich10@hargray.com
Subject: RE: Daufuskie Membership for 2009
Dear Susan:
There can be little doubt that 2008 was a
tough year providing precious few good laughs and things to chuckle over. Your letter of February 3rd is just what the doctor
ordered! Jane and I have spent most of the day laughing over it. Normally a letter like this is saved for April 1st but, then
again, Mr. Foley and the Dixons have been treating the membership like fools for 6 years, so, in a manner of speaking, every
day is April Fool's Day with Bill and Gayle.
The Melrose Club that was turned over to CCA in December of 1996 has
been completely out of operation and therefore dormant for quite some time. If your proposal was not so obviously a joke and
so transparently flawed one might take offense, but certainly no one in their right mind could mistake your letter for a legitimate
proposal. It does have some clever lines, though, such as the first sentence in paragraphs two and three. "At present, our
resort facilities are open at winter service levels with the exception of Bloody Point Golf Course and rooms availability
at the Melrose Inn." Of course, not mentioned is the hot tub, the heated pool, the gym, Jack's, the store, the Spa, the ferry
service and baggage transportation, to name just a few of the surprises in store for any member taking your letter seriously.
Should members be advised to bring their own boat and tent? Susan, Bob Hope never had a better one liner. "The resort is open
but the rooms are closed!!" Of course, any member who would trust the Dixons and Tim Foley deserves what they get.
Paragraph
three begins " Full operations of the resort are planned for 2009 as usual, except for the Bloody Point Golf facility and
subject to the adjustments being made as more companies and resources are deployed throughout the resort." Hasn't The Greenery
pulled out of maintenance with a ten month, $300,000 bad debt? Isn't a similar amount due to the West Paces Group, the last
sign of intelligent management. Will these deployments that you speak of be similar to whoever removed and repossessed the
motors to the ice making machines at Jack's? Are these the deployments we have to look forward to? Why was there no
mention of the date that full operations will resume? Why no mention of the Chapter 11 for Daufuskie Island Properties? Doesn't Tiburon have a similar Chapter 11 in Carefree, Arizona?
Will they be trying for the trifecta with their hotel in Long branch, N.J.?
In
any case, thanks for the laugh. It was perfect tonic for a cold, snowy winter day in the north. When you finally find out
who will be named interim Debtor in Possession of the property and the date that ownership will revert to the membership now
that the 1996 contract is breached beyond debate, please let us know so all of the loyal members who truly treasure
the Daufuskie Island experience can return to growing it instead of pillaging it.
R.A. McGrath
Daufuskie Island resort files for bankruptcy
By MICHAEL WELLES SHAPIRO
mshapiro@islandpacket.com
843-706-8142
Published Thursday, January 22, 2009
The owners of the struggling Daufuskie Island Resort & Breathe
Spa filed for bankruptcy Tuesday, leaving uncertain the fate of one of the island's largest employers and a list of more than
400 creditors.
The filing follows layoffs of more than 100 resort employees at the
end of last year.
"The resort is a huge contributor to our economy," said Cathy Tillman,
who writes the Front Porch, a Daufuskie newsletter. "But we have been through this before, and we weathered it," she said,
referring to 2002 when the resort's previous owner was forced to sell because of bad economic conditions.
In a news release, an official at Daufuskie Island Properties LLC,
which owns the resort, said the tumbling stock market and a lawsuit brought by a group of resort members led to the company
filing for Chapter 11 bankruptcy. The company plans to try to reorganize and sell off parts of its business. It has not ruled
out selling the entire resort, according to the release.
"Like so many others, we, too, have had to respond and react to the
extreme fluctuations and confusion in the markets. We have had to lay off more employees than usual in our winter season,
long-time employees that we care about, and that has been a difficult and emotional process," said Tim Foley, asset manager
for Daufuskie Island Properties, which is owned by Gayle and Bill Dixon of San Francisco.
The filing shows that revenue at the resort dropped sharply from $27.5
million in 2007 to $17.3 million last year. The company lists $88.2 million in liabilities and $97.1 million in assets in
the filing.
But Foley was optimistic that bankruptcy would allow the company to
reorganize and to stay in business.
"We look to this as an opportunity to regroup and reset our strategy
for the future success of our Daufuskie Island assets and to open our 2009 season in March as planned," Foley said.
Foley said in a phone interview Wednesday that bankruptcy proceedings
also will allow the company to resolve the resort members' lawsuit faster.
The Dixons have said the suit, which prevents them from selling off
assets, stands in the way of the resort's profitability.
Arguing that the sales are needed to turn the resort around, Gayle
Dixon wrote on her Web site that the resort couldn't continue under its traditional management structure, where diverse pieces
of the resort, including two golf courses, tennis courts, several restaurants, the Melrose Inn, and an equestrian center,
were run by a single company.
"I have 23 years of data... that shows annual operating losses in
the millions of dollars," she wrote. The Melrose Co. built the resort in 1980s, and the resort has changed hands numerous
times, most recently when it was purchased by the Dixons in 2002.
Alexander Beard, an attorney for the resort members, has said they
want a seat at the table during any sale discussions to ensure their privileges at the resort are not curtailed. Beard told
The (Charleston) Post and Courier hecould not comment about whether the litigation was a factor in the company's decision
to seek bankruptcy protection.
Foley said a speedy resolution to the suit is best for both parties.
Russ Brown, chairman and CEO of RBC Enterprises, which develops and
sells real estate for the resort company, said the sale of a major resort asset could allow the company to pay off its creditors.
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Daufuskie Island ---Oceanfront Residence Club
Shadow Property Owners Association
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