Posted 12/16/2013 12:00 am
The proposed auction of the Gaillardia Golf & Country Club next month is threatening to remove the last Arkansas ties to the Oklahoma City country club.
Phil Herrington, president of Little Rock’s Herrington Inc., remains the nominal owner of the 275-acre golfing spread and its 7,240-yard championship course after foreclosure action ousted him from operational control of Gaillardia.
Herrington bought the club in December 2002 as part of a $9.1 million deal with OPUBCO Development Co., led by Christine Gaylord Everest.
Ford Price Jr., a court-appointed receiver, has recommended the property be sold at auction on Jan. 24 to cure upwards of $9 million in delinquent debt Herrington has amassed.
A Dec. 20 hearing before Oklahoma County District Court Judge Patricia Parrish is scheduled on the receiver’s motion to proceed with the auction, which includes details of how the sale will be conducted.
“We’ll see if the judge approves that, and if she does, we will move forward with that document,” Price said.
As proposed, bidders are re-quired to file the qualification paperwork by Jan. 17, qualification notices will be sent by Jan. 21, and the auction will be conducted on Jan. 24 in open court.
“My goal is to make it as straightforward and transparent as possible,” Price said. “Hopefully, it will get sold at a good price, and as many people as possible will get paid.”
Herrington’s tenuous position in the ownership picture has allowed Allied Bank of Mulberry (Crawford County) to retain its endangered security claim to his Gaillardia Country Club LLC, which holds title to the property.
Herrington pledged his 100 percent stake in the limited liability company in January as additional security on nearly $2 million of debt held by Allied.
However, the club’s property is pledged as collateral to other lenders.
Little Rock’s Bank of the Ozarks exited the Gaillardia picture in August after selling its $6.8 million first mortgage position to GCC Lender LLC, an affiliate of Concert Golf Partners of Newport Beach, Calif.
“Phil is working directly with Concert Golf to work this out,” said Craig Douglass, Herrington’s spokesman. “Of course, there are legal ramifications with other parties in all this. We’ll see what happens.”
In addition to Concert Golf, Herrington will have to come to terms with First Liberty Bank of Oklahoma City, which holds a second mortgage claim of more than $1.5 million.
Also in the mix are three years worth of unpaid property taxes totaling $460,000, repaying receiver-incurred debt to cover outstanding Gaillardia bills and more that push Herrington’s country club tab upwards of $9 million.
Filings by First Liberty and Bank of the Ozarks indicate that Herrington in April quit making payments on the loans, secured in large part by the northwest Oklahoma City club’s real estate.
Without the Gaillardia property, the stock pledged to Allied Bank appears to be essentially worthless. The Allied loan is secured by additional collateral that includes a life insurance policy and an undeveloped beachfront lot in Destin, Fla.
Herrington’s money woes weren’t limited to his Oklahoma venture.
A small upscale residential development near Sundance Mountain Resort, Utah, drew a $4.7 million foreclosure action in June by Little Rock’s One Bank & Trust.
That dispute was settled after a buyer stepped in to replace Herrington in July.
The financial chaos also sent Herrington’s name to the “wall of shame” at the Country Club of Little Rock, a posting reserved for members who fail to clear their account each month.
The arrearage grew to about $5,700 before his name disappeared from the bulletin board of the downstairs common area, indicating that he was either cut off or the bill was paid off.
On paper, Herrington owns Gaillardia and its palatial 55,000-SF clubhouse.
However, Price has controlled the business affairs of the club since June 27. His appointment as receiver came 13 days after First Liberty Bank started the foreclosure ball rolling. The lender provided a $500,000 revolving line of credit to help the court-appointed receiver keep the club in business after creditors began repossessing equipment.
Herrington’s money woes extended to the Oklahoma City Water Utilities Trust, which is owed $277,000 for irrigating the golf course.
Some members would like to see Gaillardia return to local ownership and have indicated their intent to make a run at buying the club at auction.
“That is still very active,” Price said. “There is a group of members who are banding together, and they continue to express an interest in purchasing the club. If we move forward with the bid, we’ll find out how serious they are.”
Jeff McDougall, president of JMA Energy Co., said his group of Gaillardia members is serious about entering the ownership picture.
“We view the whole situation as a positive turning point for the club,” said McDougall, who owns the Oklahoma City drilling concern. “We think it’s long overdue to take the uncertainties of being a commodity out of it.”
McDougall, who also owns the largest manor in Gaillardia at 17,500 SF-plus, wouldn’t be surprised if another bidding group or two shows up at the party.
“It’s a great place,” McDougall said. “It just needs better management.”
Art Swanson, chairman of Cardinal River Energy I LLC in Oklahoma City and a founding member of Gaillardia, joined the foreclosure litigation as an intervener on behalf of the club membership.
Swanson and others believe the Gaillardia membership had the first right of refusal to buy the club. However, he said, Judge Parrish has indicated that right was terminated by the foreclosure process.
“That was surprising to us,” Swanson said. “We haven’t seen an order, so we haven’t made a decision on whether to appeal that.”
Swanson has known Herrington since he bought the club 11 years ago from the heirs of media billionaire Edward Gaylord but hasn’t talked with him during the past 60 days.
“I always found him willing to listen although we haven’t always agreed,” Swanson said. “Since mid- to late 2008, the property started getting a little ragged around the edges. It was pretty obvious there were some financial issues.
“Had he gone to the members years ago, this situation could’ve turned out differently. I expressed that with him directly. He just didn’t want to do that.
“He was more invested in trying to work it out himself. It was always ‘there is a solution around the corner.’ He was always long on promises and short on specifics.”