The declining popularity of golf, the increased expense of maintaining golf courses and a surplus of courses are all contributors to the downward spiral of the golf course industry. In the Bloomberg BNA article “The Challenges Facing Distressed Golf Courses,” Steven Werth discussed the challenges that golf course bankruptcies create for lenders, debtors and homeowners.
In his article, Mr. Werth explains that one of the most common restrictions facing golf course businesses are restrictions relating to the use of the land itself, often created during the development of an adjacent residential community and set forth in easements or covenants, codes and restrictions. Zoning restrictions may also play a role. Mr. Werth explains how the bankruptcy process permits companies the breathing space necessary to attempt to renegotiate with their lenders, as well as adjacent homeowners and even governmental agencies, in an attempt to explore whether redevelopment of the land is possible or even feasible.
“Competent legal advice, combined with a clear understanding of the various moving parts, has the potential to turn a case with significant barriers to success into one with a significant payout to creditors, and opportunity for a debtor to reorganize and potentially redevelop its property,” Mr. Werth writes.