A federal judge on Wednesday approved a bankruptcy exit plan that hinges on the sale of an exclusive Johns Island golf course to billionaire NFL team owner Bob McNair.
The $11.3 million deal is expected to close Friday.
At a hearing in Charleston, Judge John Waites gave his blessing to the financial restructuring submitted by the bankrupt company that owns The Golf Club at Briar’s Creek.
McNair and his backers are purchasing all the assets, including the Rees Jones-designed layout off River Road, the clubhouse, equipment and unsold home sites. Their offer includes an additional $2 million in operating funds for a newly formed, debt-free club.
McNair, majority owner of the Houston Texans and a longtime Kiawah Island homeowner, is a founding member of Briar’s Creek.
Members overwhelmingly supported the sale, according to a formal vote.
“This is a great outcome,” club spokesman and founding member Mike Martin said. “This is going to be terrific for Briar’s Creek.”
The elite club hit hard times during and after the last recession. Revenue plummeted as members resigned and real estate sales dried up, forcing Briar’s Creek to borrow money from within its ranks. It filed for bankruptcy protection in February with the McNair buyout proposal in its back pocket.
One other prospective buyer emerged, but the court disqualified that offer.
At a hearing last month, McNair said he isn’t interested in making money from the purchase. His goal is to stabilize Briar’s Creek’s finances, maintain its quality and attract more members, he said. General Electric CEO Jeff Immelt, another founding member, plans to invest in the new ownership group, according to a court filing last week.
The money from Friday’s sale probably will be distributed to creditors in June, club attorney Bill McCarthy said.
A local bank that’s owed more than $2.85 million and various vendors will be paid in full.
After other expenses, roughly $4 million will be left to resolve other claims totaling $12 million, McCarthy said.
Most club members will recoup some of their refundable deposits, which have declined by about 40 percent in value. Their payments will be about one-third of the new, lower calculations. Someone who paid $100,000 to join Briar’s Creek would get a check for about $20,000 based on the revised $60,000 initiation fee value, McCarthy estimated.
The founding members, who contributed at least $700,000 each to launch the golf club about 15 years ago, and other equity investors will receive nothing, he added.
Waites’ approval of the restructuring will preserve some money for creditors. Under federal law, real estate buyers in a bankruptcy sale can avoid property-transfer taxes if the reorganization plan is “confirmed” by a judge. In the case of Briar’s Creek, that bill would have come to about $40,000, McNair attorney David Hawkins said.
Contact John McDermott at 937-5572.