Bankruptcy Saves The Bull From Sheriff’s Sale

Five years ago, Golf Digest named The Bull at Pinehurst Farms, located in Sheboygan Falls, one of the top 70 public golf courses in America. This year, the Jack Nicklaus designed course was almost sold at a sheriff’s sale. The sale was called off minutes before it was scheduled to start because the course’s owners filed for Chapter 7 bankruptcy.

How Did Filing for Bankruptcy Save the Golf Course?

The Sheboygan Press is reporting that a minority owner of the course is attempting to pull together enough financing to buy it. Filing for bankruptcy gives the potential buyers more time to put together a deal. “Richard Hahn — the attorney for The Bull’s creditor, Wisconsin Bank & Trust — said that The Bull and its owners have been unwilling to pay what is actually owed on the loan. The default on the loan is around $4.2 million, but Hahn said the owners are willing to pay about half of that. That won’t cut it for the bank, he said.”

It will be interesting to see what happens to this course for several reasons. 

First, we are seeing several courses in Wisconsin close due to golf’s declining popularity. Younger folks find the game too slow, long, and expensive. This is changing the golf industry in a big way. 

Due to golf’s decline in popularity, it is going to be harder for developers to get financing for golf course building and development. This puts a crunch on the middle of the market. We’ll always have the American Club on one end of the spectrum, and mini golf in the Dells on the other, but what will be left for the rest of us? This is the second reason it is going to be interesting to see what happens to The Bull. 

Finally, this is a very public example of one of the ways Chapter 7 can be used by business owners to help them hold on to their property. In this case, a minority owner is looking for financing in order to buy the property from the majority owners and current creditors. This is not an uncommon occurrence. Business owners frequently use Chapter 7 to get a fresh start or, as in this case, buy themselves some time to get their financial house in order. 

Individuals can also use Chapter 7 as a sort of financial reset button. While Chapter 7 bankruptcies are often called liquidation bankruptcies, when an individual files under this chapter it is more about wiping the slate clean of debt than getting rid of excess inventory, property, or contractual obligations. 

Who can file for Chapter 7 Bankruptcy? 

The ideal Chapter 7 candidate will have primarily unsecured debt (ex. credit cards, medical bills, utility bills, payday loans, etc…) and be current with any secured debt payments such as mortgage and car/lease payments. If this is the case, the individual will typically be permitted to exempt (or keep) most of their personal property. 

Our firm files a lot of Chapter 7 bankruptcies, for both businesses and individuals. If you are in financial trouble, and think bankruptcy may be in your future, let’s talk. Contact us today to schedule an initial consultation. 

New Rules For Small Businesses Who File Bankruptcy Under Chapter 11

When Goldilocks enters the home of the three bears, she searches for creature comforts that are “just right” for her. Her story involves a lot of trial and error — not to mention breaking and entering, and risking the wrath of a family of bears — but children who hear the tale are delighted when she finds something “just right.” There’s something inherently satisfying about finding the right fit after a quest that children are quick to latch on to, and the morally ambiguous tale gives them permission to compare, contrast, and find things in this world that are “just right” for them. 

Until recently, small businesses going through the bankruptcy process were like a bunch of frustrated Goldilocks who never found anything “just right.” Filing under Chapter 7 meant liquidating assets and shutting down while filing under Chapter 11 often proved too cumbersome or expensive to manage. 

A new federal law, The Small Business Restructuring Act of 2019 (SBRA), which is also being referred to as Subchapter V, has created a new bankruptcy process designed to be “just right” for small businesses. 

Understand SBRA

The SBRA fast-tracks the bankruptcy process and allows for far greater flexibility in negotiating restructuring plans with creditors. It also specifies that a trustee will work with the small business debtor and its creditors to facilitate the development of a consensual plan of reorganization. 

It is the role of the trustee that makes the SBRA process really different from other chapters of the bankruptcy code a business can file under. The trustee is supposed to take a very hands-on role, much like that of a trustee in a Chapter 12 or 13 case filed by an individual. 

According to the Department of Justice, it has hired around 250 of these trustees so far. “These trustees offer a diverse set of business, accounting, turn-around management, and legal skills.  In addition, the USTP developed a comprehensive manual and handbook to guide staff and subchapter V trustees in carrying out their new SBRA responsibilities; provided extensive training to staff, subchapter V trustees, bankruptcy professionals, and others interested in the new law; and coordinated with the bankruptcy courts on administrative issues to ensure a successful implementation.”

Small Business Debtor

Only a “small business debtor” may elect to proceed under the SBRA. A small business debtor may be an individual, partnership, or corporation that: 

  • Is engaged in commercial or business activities;
  • Has no more than $2,725,625 of total debt; at least 50% of which must be from the business or commercial activities; and
  • The debtor’s principal activity cannot be a single-asset real estate operation.

A debtor that meets these criteria may voluntarily elect to file under Subchapter V of Chapter 11. 

At Hanson & Payne, we are eager to help small business clients who feel this new process may be “just right” for them. If you would like to schedule an initial consultation to talk about the benefits of the new SBRA bankruptcy process or discuss other options available to your business, please contact us.

The $10 Million Car At The Center Of A Wild Wisconsin Supreme Court Case

Last year we blogged about a pending Wisconsin Supreme Court case involving a rare car stolen from a Milwaukee factory. The case was recently decided, and the ruling is going to have a big impact on other replevin actions filed in Wisconsin. 

Replevin Recap

As we explained in our previous blog post, replevin is a legal action. It is brought by a plaintiff who believes the defendant has wrongfully taken or failed to return a piece of personal property — which means any sort of thing except land. The plaintiff wants the property back, and may also want paid damages for the hassle of getting their property back.

At Hanson & Payne, we are often involved in cases where a replevin action is filed. We work to get the disputed property into the rightful owner’s hands. We have represented both debtors and creditors in replevin cases.

The Talbot Lago

It is rare that a replevin case goes all the way up to the Wisconsin Supreme Court, the highest court in the state, so we have been closely following the case Mueller v. TL90108 LLC. It does not hurt that the case sounds like a cross between a Bond movie and a John Grisham novel. 

In 2001, thieves broke into the old Monarch Plastic Products factory on Milwaukee’s lower east side and stole a disassembled French sports car that its elderly owner had been trying to restore since 1967. The car, a 1938 Talbot Lago T150 C teardrop coupe, was worth an estimated $7 million.

Not only was the car stolen, so were all the documents and spare parts related to it. Other valuable items in the factory-turned-garage were not touched. There was no sign of forced entry, but in a sinister turn of events, the phone lines to the owner’s house were cut the same day the car was stolen.

In 2005, the car’s owner passed away. He left his entire estate, including the rights to the stolen car, to his cousin, Richard “Skip” Mueller. A few years later, Mueller sold a majority share of the right to own the car to Joseph L. Ford III, who has experience tracking down rare stolen cars.

Then things went quiet, and it seemed like the car was gone forever. But in 2016, the authorities alerted Mueller and Ford that someone was trying to title a now completely restored Talbot with the same chassis number in Illinois!

Mueller and Ford demanded the return of the stolen car, but the man who had purchased it, Rick Workman, refused. Workman claims he had no idea the car was stolen. He purchased it in good faith from a European dealer.

In February 2017, Mueller and Ford filed a replevin action against the company Workman used to purchase the car, TL90108, LLC.

It’s a case that fits the definition of replevin to a T. Mueller and Ford, the plaintiffs, are the rightful owners of a piece of personal property, the Talbot Lago. They are suing the defendant, TL90108, LLC, for the return of the vehicle.

Lower courts couldn’t agree on what should happen to the car. Wisconsin’s replevin statute gives plaintiffs a six-year window to file a case, and the various parties had different ideas about when that six-year countdown should begin. The Wisconsin Supreme Court agreed to take the case and clarify when the clock starts ticking in replevin cases. 

What The Court Said

The Court ruled that the six-year clock started ticking when Workman purchased the Talbot Lago through TL90108, LLC in 2015. 

According to the ruling, the trigger is the beginning of the wrongful detention by a defendant, not the original theft, not the plaintiff’s discovery of the defendant’s possession of the item, and not the timing of the plaintiff’s demand of the item’s return. 

What This Means 

This case is going to be important because it opens the door for people like Mueller and Ford, who lost track of the property that was taken from them for a number of years, to bring a replevin action once the property is rediscovered. 

For creditors, or anyone that handles the sale of second-hand goods or repossessed goods, this case underscores the importance of ensuring the property you are claiming is rightfully yours. You open the clients you transfer repossessed or second-hand property to up to liability if the item you are transferring does not have a clear title. 

Our firm will continue to be involved in replevin cases, representing both debtors and creditors. We doubt we will ever see a case as wild as this one, but we do expect to cite this case going forward. If you think you have the makings of a replevin case on your hands, don’t hesitate to contact our office