Ghost Town in the Sky is staring down the barrel of foreclosure.
BB&T has filed for foreclosure against the amusement park, which owes BB&T $9.5 million dating back to 2007. Of that amount, $6.5 million was to purchase of the 288-acre mountaintop property in Maggie Valley and the rest was for improvements.
A foreclosure hearing is scheduled for Sept. 20, which will set the wheels in motion for Ghost Town to be auctioned off to the highest bidder on the courthouse steps. If Ghost Town is unable to stall it, and if BB&T really goes through with it, Ghost Town could be auctioned off before the end of October. Once the ball is rolling, however, BB&T can set a later date or delay it at will.
Ghost Town has been running from BB&T for almost two years. It filed for bankruptcy in early 2009 primarily to shelter itself from BB&T’s demands to pay up. Bankruptcy was the only way to keep BB&T at bay, according to court testimony early in the bankruptcy process.
Ghost Town also owes $2.5 million to more than 200 small businesses left hanging after providing services or products to Ghost Town, from local electricians and plumbing supply stores to advertising firms and souvenir vendors. These are last in line, however, and it is unlikely the property would bring in enough for them to see any of the money they are owed.
Companies cannot hide from their debts in bankruptcy court forever and must eventually emerge from bankruptcy with a plan to pay off what they owe or face liquidation. After 18 months in bankruptcy, Ghost Town has not produced a viable reorganization plan, according to the bankruptcy administrator.
BB&T got permission from the bankruptcy judge in May to begin foreclosure proceedings. But BB&T was dissuaded from pulling the trigger by the promise of a payoff by one of the park’s primary owners, Al Harper, who also owns the Great Smoky Mountains Railroad.
Harper staved off the foreclosure for four months with an offer to buy the park out of bankruptcy for $7 million. It was less than what BB&T was owed, but the bank was willing to take it.
Harper said upfront the deal was contingent on financing, and so far that hasn’t come through. The looming foreclosure now brings additional pressure to bear on Harper to produce the money to consummate the deal or lose the amusement park.
BB&T has other outlets to recoup the full cost of what it loaned Ghost Town. Several early investors put up personal guarantees to back the BB&T loan. The loan was also partially backed by a federal rural development loan, placing taxpayers on the hook for a potion of it. BB&T could go after either if a sale of the amusement park on the courthouse steps or to Harper directly failed to bring in the full amount it’s owed.