Bright’s Creek is currently under foreclosure proceedings with its lender and a federal judge has ordered a temporary receivership to oversee management of the property.

U.S. District Judge Martin Reidinger ordered on July 8 that a temporary receiver be granted to manage Bright’s Creek.

The case was filed in the Western District of North Carolina-Asheville Division by the plaintiff, Lantern Business Credit, LLC, a Delaware limited liability company against defendants, Alianza Trinity Development Group, LLC, a Florida limited liability company, Alianza Trinity Holdings, LLC, a Florida limited liability company, Bright’s Creek Golf Club, LLC, a North Carolina limited liability company, Pasquale Giordano and Omar Botero (partners and owners of Bright’s Creek).

Lantern Business Credit claims that it loaned the defendants $10.8 million and that there was a breach of the loan agreement and post-closing agreement, breach of the security agreement and breach of the note, according to court documents.

According to the order, on Nov. 5, 2015, the plaintiff sent the debtors and guarantors a “reservation of rights” letter, in which plaintiff gave notice to the debtors and guarantors of certain alleged breaches of obligations imposed upon them by the loan documents.

“Specifically, plaintiff asserted that the debtors failed to obtain a payment and completion bond for the construction of a swim and fitness center for Bright’s Creek, failed to obtain a property survey and updated loan title policy and failed to provide timely and complete monthly financial statements and accounts payable reports,” according to the order.

The judge’s order said that in December 2015, the lender learned that Botero had secured a third party loan on his home to provide liquidity for Bright’s Creek.

According to the lender, the loan and earlier defaults signaled to Lantern that the debtors were experiencing liquidity problems.

“On Jan. 4, 2016, plaintiff withdrew $465,421.44 from the account it established to fund Bright’s Creek’s operation and development, and deposited those funds into an account established to fund monthly interest payments on the loan,” according to factual background listed in the federal order.

On Feb. 3, 2016, the parties executed the first amendment to the loan agreement, according to factual background in the federal judge’s order, whereby plaintiff made a non-standard disbursement to the debtors in the amount of $250,000.

“On Feb. 17, 2016, the debtors informed the plaintiff that they again could not afford payroll or otherwise satisfy outstanding accounts payable obligation,” states the court order.

On March 21, 2016, East West, the company hired to manage the golf club, delivered notice to the Bright’s Creek with a courtesy copy to the lenders that the debtors were in default of their agreement for failing to pay East West’s management fees, fund operating expenses and maintain workers’ compensation and errors and omissions insurance, according to court documents.

On April 11, 2016, the lender initiated foreclosure proceedings in Polk County Superior Court. Shortly after, according to court documents, on April 17, 2016, the debtors’ and Bright’s Creek’s property and liability insurance policies were cancelled for nonpayment. The lender filed its complaint with federal court on April 22, 2016.

Giordano testified according to court documents that the cancellation of insurance was caused by the plaintiff’s sudden withdrawal of the debtor’s operating capital at the end of March. Giordano also said the withdrawal caused the debtors to default with regard to a $200,000 property tax payment.

Bright’s Creek is also currently in foreclosure proceedings with Polk County.

The Bulletin was unable to obtain the exact amount of taxes owed to the county as of press time.

“Defendants Giordano and Botero state that they have independently and privately raised $648,000, that insurance policies are back in place and that they ‘intend to satisfy the tax collector with an agreement that will rely on the refinancing or upcoming asset sale to fund,’” states federal court documents. “Defendant Botero further states that the defendants have entered into a purchase agreement with a new investor, Legacy, and that the parties to that agreement expect that Legacy will pay off the loan in full. The closing of that transaction, however, has not taken place.”

Vendors have been notified through a letter dated Sept. 7, 2016 that Bright’s Creek is in arrears on a number of its vendor accounts, including the Bulletin.

In this letter to vendors, Marc Rudow, with Roberts & Stevens Attorneys at Law, who has been appointed receiver for Alianza Trinity Development LLC and Bright’s Creek Golf Club LLC, said he has the responsibility of protecting and preserving Bright’s Creek for the purpose of maintaining the property and its value. Rudow said he has engaged East West Partners Club Management Company Inc. to manage Bright’s Creek during the receivership.

“East West and I would like to continue to work with you; however, please know that the receiver’s access to funds is limited to necessary operating expenses,” Rudow said in his letter to vendors. “At this time, the receiver is not in a position to pay or otherwise satisfy the past due debts of Bright’s Creek but may be in a position to work with you going forward.”

The following letter was received by the Bulletin Friday:

Bright’s Creek response to recent foreclosure proceeding

On behalf of the owners of Bright’s Creek, first, we want to thank you and the Tryon Daily Bulletin for its fair coverage and support of our community.  Furthermore, we want to assure you, your readers, as well as all of the members of the neighboring communities, that we, the owners of Bright’s Creek, remain fully committed and dedicated to the success and stability of this wonderful community.  We will continue to secure the necessary resources required to overcome any present or future challenges.

Second, as to the pending foreclosure, it is important to note that the foreclosure action initiated by our senior lender, is NOT the result of a financial default. In other words, Bright’s Creek was never late with its payment obligations; in fact Bright’s Creek was current with all principal and interest payments throughout the entire term of the loan. Instead, the foreclosure action was brought as a result of “technical defaults”, which we are contesting in court, and it is these conceptual differences with our senior lender which have led to this unnecessary action. While unfortunate, this is only a temporary situation; We are working to secure a firm commitment to refinance and replace the current lender, and put an end to the foreclosure action, so that we can finally get back to the business of developing our beautiful community. We will of course inform you when it is appropriate.

In the meantime, the court has appointed Mr. Marc Rudow as temporary receiver, to assists in overseeing these matters while this transition is completed.  Mr. Rudow and his lawyer, Mr. Denny Martin, have worked closely with us and our attorneys, Ed Bleynat and Greg Johnson at Ferikes & Bleynat (who by the way have done an incredible job), to manage this unfortunate situation.  Mr. Rudow’s fair and sensible manner, has helped to minimize what could otherwise be a potentially damaging situation for the community.

Finally, we want to acknowledge the incredible people that are the fabric of Bright’s Creek, because at its core, that’s what Bright’s Creek is all about; people… Families.  So, to our amazing staff and all of our incredible members, the Bright’s Creek family, we want to thank all of you for your loyalty, commitment and support. We remain committed to you and to the ideals and goals that we have set for our community.

Kind Regards,

Omar Botero

Chairman & C.E.O.

On behalf of the owners
of Bright’s Creek