Oklahoma City-based First Liberty Bank claims in court documents that the Arkansas-based owners of Gaillardia Golf and Country Club have been so short on cash in recent months that the exclusive club is in danger of not being able to afford to water its greens this summer and that creditors have threatened to repossess its golf carts.
The bank moved to foreclose on the Arkansas-based owners of Gaillardia Golf and Country Club late Friday and has asked the court to place the club into the hands of a receiver to protect the property from further damage.
In court documents, First Liberty Bank claims Gaillardia’s owners owe the bank more than $1.5 million, plus more than $19,000 in interest on loans it extended to the country club in 2012 and 2013.
First Liberty claims the club ownership also owe $6.8 million on a first mortgage to Bank of the Ozarks, plus $460,000 in overdue property taxes, according to court documents.
Faced with ongoing cash shortfalls, four exercise machines were recently repossessed by creditors at Gaillardia and food and beverage vendors have placed the club on “cash on delivery” status, First Liberty claims in court documents.
Gaillardia’s sole source of irrigation water for its 18-hole golf course is in jeopardy after it has lagged in paying the Oklahoma City Water Uitlities Trust a lump sum required to secure water rights, the bank claims. Gaillardia’s owners have delayed closing the water rights agreement four times and the course could be “irreparably” harmed without water this summer, the bank claims.
The roof of the 55,000 square-foot Gaillardia club house leaks after sustaining hail damage, but the owners have yet to have it repaired although they received insurance money for the damage, the bank claims in its lawsuit.
“Despite numerous requests, (the) owner has been unable to properly account for membership dues and revenue from banquets and other events,” First Liberty said in its motion to appoint a receiver for the property.
First Liberty has offered to extend the club a short-term loan once the property is in receivership if the club is unable to make payroll or pay other creditors, the bank said.
Joey Root, First Liberty Bank president and CEO, said in a statement that he hoped the club would remain open during the court proceedings.
“It is unfortunate the club faces a variety of financial challenges in addition to its obligations to First Liberty Bank,” Root, a member of the country club, said in the statement. “After much effort, First Liberty was unable to reach common ground with the borrower on a viable solution.”
First Liberty Bank is asking an Oklahoma County District Court judge to appoint a receiver to take control of the country club and its more than 240-acre, 7,119 yard championship golf course.
The Little Rock-based private equity and development firm Herrington Inc., controlled by businessman Phil Herrington, has owned Gaillardia since 2002, when it purchase the property from a subsidiary of the Oklahoma Publishing Company for $9.1 million.
The foreclosure comes after weeks of rumors about the club’s future among its membership. In a letter to members earlier this week, Herringtion announced that Gaillardia would cancel its annual Le Concours tournament scheduled for next week.
“We are working on all of the issues at the club with the only goal being the long-term financial health of Gaillardia as a club and as a community,” Herrington said in a letter to members announcing the tournament had been scrapped.
In a statement to The Oklahoman obtained before the foreclosure action was announced, Herrington denied rumors that Gaillardia was experiencing financial difficulties or was for sale.
“Herrington Inc. has owned Gaillardia Country Club for the past 10 years and is proud of our association with the club and the community,” Herrington said in the statement. “During that time we have invested millions of dollars into the club and will continue to invest into the future. The short answer is that the club is not for sale nor do we have any plans to file for bankruptcy.”
Attempts to reach Herrington after the foreclosure action was filed on Friday were unsuccessful.
In a letter to club members, owner Phil Herrington said he was shocked by First Liberty’s actions, although he conceded “there are issues that need to be addressed at the Club.”
“We are working 18-20 hours a day with responsible members of the Oklahoma City community, some of whom are Gaillardia members, to address them,” Herrington wrote.
“We are working on our response to the suit this weekend and hope to minimize its impact on the Club’s members and the Gaillardia brand in the community,” he wrote.