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Posted December 17, 2008 | Copyright © The Northern Virginia Daily
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Blue Ridge Shadows files for bankruptcy protection
By Sally Voth -- Daily Staff Writer
FRONT ROYAL -- Five months after opening a Holiday Inn, Blue Ridge Shadows Hotel and Conference Center LLC has filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court.
A similar petition was filed by Blue Ridge Shadows LLC, which handles the adjacent Blue Ridge Shadows Golf Club. Both were filed Dec. 1.
However, both facilities will remain open, Blue Ridge Shadows managing member Tom Jackson said Tuesday afternoon.
His comments were echoed by Mike Ahrnsbrak, general manager of the golf course.
"It's a Chapter 11 reorganization, so absolutely [we will remain open]," he said.
Blue Ridge Shadows Hotel and Conference Center has total assets of about $25 million, with liabilities of about $20 million, according to the bankruptcy petition.
The hotel and conference center group lists real estate worth $24 million with nearly $800,000 worth of personal property, according to court records.
The petition lists more than 70 creditors holding unsecured claims.
The hotel, which Jackson said opened July 9, has made $528,522 thus far, according to court records.
As far as the 18-hole golf course goes, there are assets of about $9.1 million and liabilities of $6.6 million, according to the bankruptcy petition filed.
It says the golf course has made $984,611 this year, and took in about $1.1 million in 2007.
Fairfax attorney Timothy J. McGary, representing both Blue Ridge Shadows corporations, has filed motions asking that they be allowed to continue to pay employees their pre-bankruptcy petition wages.
"Retention of the employees is critical to the Debtors in this case," one of the motions says. "Few employees will continue to work for an entity that has filed a bankruptcy petition without assurance that they will be timely paid."
On Tuesday, Summit Community Bank filed a response asking the court to not allow Blue Ridge Shadows LLC to use cash collateral and asking that a lien be put on the corporation's property and cash collateral. A similar response was filed against the hotel company.
Blue Ridge Shadows Hotel and Conference Center owes the bank about $17.5 million, one of the responses says, and hasn't paid any principal or interest in eight months.
"Furthermore, Summit's estimation of fair market value is less than the amount owed on the Summit indebtedness," it says. "Summit alleges the Debtor has been trying to market the Property in an excess of six (6) months, and that Debtor has not received an offer in excess of Summit's indebtedness."
Summit is owed around an additional $6.7 million by the golf club, according to the response filed by the bank.
"Debtor has no means to make adequate protection of regular monthly mortgage payments, or monthly interest payments, other than through the utilization of Summit's own collateral," it says. "Debtor wants to use the cash collateral to make adequate protection payments and to fund operating expenses during a period of negative cash flows, which would be through April 2009. This subjects the secured creditor to an impermissible form of double jeopardy.
"Based on the Debtor's own projections, there is no reasonable possibility of a successful reorganization within a reasonable time."
Jackson said the restaurant Houlihan's, which adjoins the hotel and opened in June, is not included in the bankruptcy filing. The restaurant controls all the food and beverages for the hotel, including catering for events such as weddings and banquets, he said.
Warren County Administrator Douglas Stanley said he hoped the bankruptcy filing was in order for the corporations to reorganize.
"Certainly, we look for the Blue Ridge Golf Club and hotel to be a big part of our county's economic development strategy in the [U.S. 340-522] corridor in the coming years," he said.
There is a motions hearing scheduled for this morning.
* Contact Sally Voth at email@example.com
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