Wohali almost couldn’t pay its remaining employees Aug. 15 after filing for Chapter 11 bankruptcy protections Aug. 8.
But a group of individuals who’ve purchased lots in the gated golf resort in western Coalville say they’ll front Wohali the money for this pay period.
According to their petition in Utah’s U.S. Bankruptcy Court, the luxury development’s only remaining employees are the ones maintaining its golf course. Everyone else has been laid off, according to other lawsuits.
“Keeping this golf course alive and operating is a top priority to preserve the value of the estate,” court papers filed by the Wohali landowners say.
Aug. 15, Judge Peggy Hunt granted their request to pay the remaining staff. The one-time payment totaling about $160,000 will be treated as an “administrative expense” during the bankruptcy case, meaning Wohali may need to pay its landowners back later in the proceedings.
Administrative expenses are near the top of the hierarchy of debts that should be paid by the resort.
The next most important are debts to “secured creditors.” In this case, those are the primary foreign lenders who financed the golf resort under the federal EB5 loan program.
EB5 lenders’ identities are private, but in a lawsuit they claim resort owners owe them more than $85 million, including interest and fees on their original $79 million loan.
Attorney Michael Johnson of Ray Quinney & Nebeker, who represents the foreign lenders, agreed Friday that the golf course must remain open, calling it the “heartbeat of this project.”
Wohali faces a litany of other lawsuits though, from contractors and service providers who say the resort hasn’t paid them in months.
They’re called unsecured creditors, and bankruptcy attorney Tom Beckett with Parsons, Behle & Lattimer said they won’t get paid until the EB5 lenders are.
“There have been a number of lawsuits by unsecured creditors. Those lawsuits now go on hold, and we see what happens with the bankruptcy case,” he said on KPCW’s “Local News Hour” Aug. 15.
Sierra Pacific Windows filed the latest lawsuit Aug. 11, claiming it’s owed more than $162,000.
Generally, the goal of chapter 11 bankruptcy isn’t to dissolve a business but instead to reorganize and pay back debts over time.
“This was a very difficult decision which affects Wohali staff, contractors, the city and others,” Wohali founding partner John Kaiser told KPCW Aug. 15. “We hope to work with these groups in order to arrive at a solution which works for all.”
Another hearing in U.S. Bankruptcy Court hasn’t been scheduled yet.
Parsons, Behle & Lattimer is a financial supporter of KPCW. For a full list, click here.
