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Latest Village News Stop by and check out the new Game Room, Fitness Center, and Theater Room located at the Village at Izatys Reception Center. We now have pool tables, air hockey, dart boards, and video games available in the game room. The fitness center includes 2 elliptical machines, a treadmill, and a recumbent bike. Commerce Bank Gets First Izatys Offer Leisure's website is hotels.leisurehotel.com and that company built a five-star hotel in Walker, Minnesota on Leech Lake which opened last spring. Hines, who has worked for Commerce Bank to show Izatys and check on the various buildings at the property since early last fall, said at least two other companies were also expected to enter the bidding soon. Commerce Bank would not reveal the offer price, citing confidentiality during the bidding process. Leisure Hotels own properties in Louisiana, Kansas, New Mexico, Colorado, Iowa, Minnesota, Oklahoma and Missouri. Izatys closed its doors publicly in October of 2007 and later filed Chapter 11 bankruptcy. After a brief stint trying to operate in the summer of 2008 with a make-shift clubhouse based in the basement of the Links Lodge and Blackbrook Golf Course open, the bankruptcy court pushed Izatys Resort LLC group into Chapter 7 liquidation. Commerce Bank became the owner of Izatys outright after former owners failed to redeem on the property, gaining title on December 28th, 2008. Since the U.S. Bankruptcy Court ruling converting Izatys Group, LLC Chapter 11 reorganization case to Chapter 7 liquidation on September 11, 2008, Izatys Group LLC has turned over control of the Izatys Resort property to Commerce Bank. All operation of the resort has been closed for the winter. Although not yet approved by the court, Commerce Bank has advised that it intends to appoint Dick Tollette as the receiver for the property and that he will oversee the closing and shutdown of Izatys Resort. Dave Kramber relinquished the keys to Commerce Bank and Dick Tollette on Monday, September 15th. We have also been informed by Dick Tollette that it is Commerce Bank’s intention to properly prepare the golf courses for winter to limit any further damage to the courses and to properly close all buildings. We are pleased to inform you that plans have been put into place to continue operations of the sewer system through Zappa Management Group. All other common areas of Izatys Townhouse Association will continue to be maintained and serviced by Zappa Management Group. As always, we will continue to update everyone as additional information is received. September 16th, 2008 Izatys Resort is closed until further notice After months of uncertainty, U.S. Bankruptcy Court Judge Nancy Dreher has ordered that the Izatys Group, LLC Chapter 11 reorganization case be converted to a Chapter 7 liquidation. The ruling came yesterday afternoon following a 90-minute hearing on motions by the U.S. Trustee to convert the case and by the debtor to once again continue the hearing on approving an amended reorganization plan. Judge Dreher, ruling from the bench, gave a number of reasons for her decision: The debtor has had 4 months to work out a deal with Commerce Bank and get a reorganization plan approved and has have failed to do so. The debtor's stated objective dating back to the filing of the case last December has always been to sell the resort but the market tested the value of the property "which didn't turn out too well" (the April auction advertised nationally failed to realize a price sufficient to off the bank). Now that the resort's high season is coming to a close, the debtor's reorganization plan depended entirely on the ability to obtain new financing. The judge said that the loan commitment letter presented at the hearing "deserved little respect" because it contained a number of "outs" for the lender and it wasn't clear if it was even signed by the lender (the copy submitted was not signed, had expired and on cross examination, one of the members of the debtor said that he didn't bring the signed commitment or the extension with him to court).The feasibility of the proposed reorganization plan remains a question as does the credibility of the debtor.In short, the judge said that she was tired of attempts by the debtor to get more time and that the current financing proposal was simply "too little, too late." Counsel for the Unsecured Creditors' Committee also argued against converting the case to a liquidation because creditors would get nothing (the reorganization plan proposed making some payments). The judge said she did "feel for the unsecured creditors but they were not going to get much under the plan." Assuming the debtor does not appeal the judge's order, a Chapter 7 Trustee will now be appointed by the court to take control of the business and assemble and sell all assets of the debtor. Thursday's ruling does not affect the right granted earlier to Commerce Bank to foreclose on the resort property. The attorney for the bank said at yesterday's hearing that a notice of pendency of foreclosure has already been filed with the Mille Lacs County Recorder and that publication of the foreclosure notice will start soon. Assuming the foreclosure proceeds in the usual manner, the bank should have title to the property by year-end (or shortly afterward). I also expect the bank to have a receiver appointed by the district court which will give the bank the right to enter and secure the property and perform day-to-day functions needed to preserve value--including operating the sewer facility. I'll update the situation as we receive additional information. Tim Stoltman As you know, the amenities at Izatys Resort were closed early in the summer season. Izatys has now opened the Black Brook golf course and Links Lodge Hotel with a limited bar, restaurant, and golf shop located in the lower level of the hotel. The basketball and tennis courts and children's playground are also available. Izatys Resort is also renting boat slips, one pontoon, and bicycles. To inquire about any of the amenities or to book tee times, please contact Izatys Resort at 320-532-3101. The current golf rates are as follows: Dave Kramber admits he made mistakes as owner of Izatys - both in management of the bankrupt resort and in his dealings with the community. "I was young and aggressive," he said. "I learned a lot, and I'll do things different next time." Kramber is hoping there is a next time. He says he's close to the kind of deal many in the community think Izatys needs to be successful. "We have investors who want to keep it going," he said. "We need everyone to come on board and support us." If all goes according to plan, an investor will purchase the clubhouse building, convert it into a hotel and spa, and build additional townhomes. Kramber will continue to operate the golf courses and marina. Commerce Bank agreed on Wednesday, June 18, to give Kramber until the end of August to work something out. In exchange, Kramber said, he agreed to a shorter foreclosure period if the deal falls through - a two month right of redemption period instead of the usual six months. "If it doesn't happen this time, we hand them the keys," he said. In the meantime, Kramber has a new partner, Roger Jorgenson, who put up $400,000 to maintain and run part of the resort this summer. One golf course is already open, and Kramber said the hotel should be open by Friday, June 27. He plans to put a small restaurant and bar in the lower level of the Links Lodge. The clubhouse and pool will not be reopened this season. Kramber is hoping the community will support the business enough to allow him to finish a deal with developers. "I live in the community, and I still think this (Izatys) can be a great place," he said. "I hope we can all come together and support it." 'We took our licks' Kramber earned enough money from a lawn care business and other investments to buy Izatys in 2002. He knows now that he and his partners were in over their heads. "We didn't know anything about running a resort," he said. "We took our licks." It became apparent to him that Izatys lacked beds. A 28-room hotel was not enough, and the townhomes were too expensive for Izatys' clientele. Izatys would sometimes turn down 100 requests per night, Kramber said. He and his partners came up with a plan to build new townhomes, but Mille Lacs County demanded an environmental impact study. As negotiations with the county wore on, the owners' money ran out, and dreams of development turned into hopes for a sale. "The operation sucked our pockets dry," Kramber said. "I kept putting money in when I knew I wouldn't get anything out of it." He admits they "stepped on toes" in the process.  "We were just trying to survive until we got the development deal done." He had an offer last spring for $9.1 million and another last fall for $8.7, but each was withdrawn. Another party had first right of refusal, and they had 120 days to make up their mind. They told Kramber they would decide on the 119th day. In the meantime, the offers were withdrawn. Izatys filed bankruptcy in December of last year, which ended the right of first refusal. Kramber hoped that would result in a sale, but as the April 3 auction date approached, his confidence waned. The $2.8 million high bid was quickly rejected by Judge Nancy Dreher because it wasn't enough to pay off Izatys' loan from Commerce Bank, the main secured creditor. Since then, Izatys and Commerce Bank have played a tennis match of motions and objections, responses, and affidavits. The most recent came last week when the unsecured creditors committee sided with Izatys in objecting to the U.S. Trustee's motion to convert the case from Chapter 11 to Chapter 7. The change would have resulted in liquidation of the property, and in all likelihood, the unsecured creditors would have seen none of the proceeds. Izatys also filed an objection to the U.S. Trustee, along with a declaration from Kramber. In his declaration, Kramber says the golf course, marina and Links Lodge can operate at a profit, but running the entire resort in its current form cannot be profitable. In an 11th hour negotiation prior to the June 18 hearing on conversion of the case from Chapter 11 to Chapter 7, Izatys and Commerce Bank reached their deal. It was approved by attorneys for the unsecured creditors and townhome, timeshare and marina owners, and Judge Dreher decided to let Kramber's strategy play itself out. She told the attorneys for Izatys and Commerce Bank to draft an order for her to sign. The hearing was rescheduled to June 24, but attorney Michael Ridgway of the U.S. Trustee's Office said it would probably be rescheduled again, if the order is prepared by then. Ridgway said he still has the option of stepping in any time and requesting another hearing. "I'm not going away," he said. "My motion is there to preserve my right to go forward in the event that something happens to get this thing derailed." If the June 24 hearing is postponed, Ridgway said, the next important date is July 17, when a hearing on Izatys' disclosure statement will be held. Prior to that, all parties will have a chance to file comments on the disclosure statement. Once that happens, another hearing on Izatys' reorganization plan will be held, probably in the middle of August, Ridgway said. Just prior to Wednesday's hearing Izatys Group and Commerce Bank reached an agreement which will allow Izatys until August 31, 2008 to implement its work-out plan. In return, should the resort be unsuccessful in re-organizing by selling the property or attracting new investors and re-financing the loan to take out Commerce Bank by 8/31/08 then the bank gets the rights to an accelerated foreclosure process. Other details are; The US Trustee reserves the right to bring the
motion to dismiss or convert to chapter 7. If the work-out plan is approved Roger Johnson will invest an additional $500K for equity in Izatys Group. Debtor will continue to operate the resort. (they will operate one golf course and the marina this summer) Debtor will keep the resort in good condition and pay $55K in real estate taxes this summer. In the event that Izatys Group is unsuccessful in reorganizing by 8/31/08, the bank can start a "voluntary foreclosure" process. Under this scenario the bank could hold a sheriff's sale on 10/31/08 and gain clear title to the the property by 12/31/08. (This much quicker then the typical foreclosure process that may add a year to when the bank could get clear title to the property Which in a practical sense would mean the resort could be closed for another summer. The bank does not want to have this happen.) At yesterday's court hearing the Judge made the following rulings: A motion that would allow Commerce Bank to start foreclosure proceedings was put on hold till June 20Th, 2008. Approval was granted for Izatys Group LLC to incur $150K in "debtor in possession" financing to pay for on going expense during the bankruptcy. The next hearing is scheduled on June 18th to a hear motion to dismiss the chapter 11 or convert the case to a chapter 7. Last weekend, the Izatys Group LLC filed a proposed "workout plan" with the bankruptcy court. The proposed plan includes bringing in a couple of new partners and restarting resort operations this summer. The resort operations would be scaled back to include the operation of 1 golf course, the Links Lodge, the marina, a small food & beverage operation in the basement of the Links Lodge. The Clubhouse and pools would remain closed. Under the plan, secured creditors would be repaid over time from proceeds of the operation and unsecured creditors would receive a total of 5% payment on money owed over three years (3% in year one , another 1% in year two, and 1% in year three). Results of Izatys Bankruptcy Court Ruling On Friday, April 4, 2008 at 2:00pm the Izatys Bankruptcy Court hearing regarding the sale of Izatys Resort on April 3, 2008 was not approved because of a point of law. There was no further information given at the hearing but information will be passed along as the Association attorneys and the boards are notified. Izatys Auction Results At this mornings auction for the Izatys Resort property, 200 people attended with five bidders on the entire property. Opening bid for the entire property started at $2.5 million and after many attempts it was finally up to $2.7 million. Without receiving any additional bids, the auctioneer suspended the bidding for 15 minutes to give the bidders time to reflect on the property and its value. Upon resuming the bidding, there was a bid for $2.8 million and again after many attempts for more bids, the bidding was suspended. The bidding resumed with a statement that that was the final suspension of bidding. And that there would not be any bids accepted on individual parcels. After many attempts to raise the bid the auction was gaveled to a close with the final bid being $2.8 million. The development company who won the bid is Christenson Development, Inc. based in Fridley, MN. This is the same company that owns Hardwoods Golf Course just south of Garrison on Highway 169. The results of the auction are subject to the approval of the bankruptcy court. A hearing is scheduled for Friday, April 04, 2008 at the Federal Court House in Minneapolis. If approved, closing would take place on May 5th, 2008. We will inform all owners of the courts action. |
Commerce Bank Gets First Izatys Offer. September 19, 2008 on September 11, 2008, Izatys Group LLC has turned
over control of the Izatys Resort property to Commerce Bank. September 12, 2008 After months of uncertainty, U.S. Bankruptcy Court
Judge Nancy Dreher has ordered that the Izatys Group, LLC Chapter 11
reorganization case be converted to a Chapter 7 liquidation. June 19th, 2008 Just prior to Wednesday's hearing Izatys Group and
Commerce Bank reached an agreement which will allow Izatys until August
31, 2008 to implement its work-out plan. June 10th, 2008 At yesterday's court hearing the Judge made the
following rulings: May 30th, 2008 Last weekend, the Izatys Group LLC filed a proposed
"workout plan" with the bankruptcy court. The proposed plan includes
bringing in a couple of new partners and restarting resort operations
this summer. April 4, 2008 Results of Izatys Bankruptcy Court Ruling April 3, 2008 Izatys Auction Results |
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