Earlier this year we blogged about the plight of the Sheboygan Falls-based golf course The Bull at Pinehurst Farms. Now we have an update. In late June, a bankruptcy judge approved the sale of the course, which had been saddled with a $4.2 million debt to Wisconsin Bank & Trust, for $2.4 million.
According to the Sheboygan Press, the property, which is the only golf course in the state designed by Jack Nicklaus, was bought by John Dunfee and Randy Groth, both of Cedarburg:
Dunfee and Groth — who have known each other their whole lives — have embarked on multiple business ventures together, including their current agricultural commodities trading group, LaBudde Group, but Dunfee said The Bull was really his brainchild.
Being an avid golfer, Dunfee has played the course and loved it for years. When he saw it was set for a second sheriff’s sale, he reached out to the bank’s attorney in early June.
Dunfee said after the previous failed bid of $2.2 million, he was told he would need to make an offer that was at least $200,000 higher. For him, the price was too good not to bid.
It is not often that the public gets this sort of inside information about a bankruptcy, so we wanted to highlight a few things.
Timing Is Everything
First, is the steep discount the buyers received. We have no doubt the creditor would have liked to see a purchase price closer to the $4.2 million it was owed, but the fact that the previous owners filed for bankruptcy, combined with the financial crisis pushed the purchase price way down.
This is a great example of why we counsel our clients on the importance of timing as it relates to bankruptcy. While nobody could have predicted the current pandemic and resulting financial crisis, there are indications that golf is not as popular with Millennials and Gen Z. This could have a long-term impact on the golf market.
Hanson & Payne is a very business-minded firm. We are always thinking about the broader business implications of the legal advice we give because we know that is important to our clients. And it is important to us as well. Our team has deep roots in the Milwaukee area, so we want to do what we can to help our clients thrive.
The Role of the Courts
This sale also illustrates the role the bankruptcy court plays in managing the sale of distressed assets. The Bull was foreclosed on last October, and the property was set to be sold at a Sheriff’s sale. 20 minutes before the sale was scheduled to begin, it was cancelled because the course’s owners filed for bankruptcy.
Next, a group of minority owners attempted to buy the course, but that fell through. Another buyer then offered $3.1 million for the course before pulling the offer. Shortly before Dunfee and Groth made their successful bid, an unnamed buyer attempted to purchase the course for $2.2 million. The bank rejected this offer and a second Sheriff’s sale was scheduled.
That’s when Dunfee and Groth stepped in. The bank accepted their offer of $2.4 million, and the court approved the sale. In theory, the court could have demanded a higher purchase price, but that is unlikely in scenarios like this where it has taken months to find a buyer, and the main creditor accepts the terms proposed by a potential buyer.
A Rare Peek Inside
It was interesting to see this case play out in the courts and in the local papers. Few bankruptcies draw this sort of attention, which is probably a good thing, but when they do it is important to follow along.