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Wednesday, 10 March 2010 16:12

Ghost Town faces June deadline to stave off foreclosure

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Ghost Town in the Sky amusement park could be foreclosed on as early as June unless investors step forward with a cash infusion between now and then, according to Ghost Town’s bankruptcy attorney.

The theme park in Maggie Valley has been struggling with bankruptcy for the past year. Owners pledged to pull through and become profitable again.

But as of now, the company doesn’t have the money to ramp up to open for the summer season, according to David Gray, bankruptcy attorney for Ghost Town.

“We don’t have any funding to open the park,” Gray said in court last week.

Meanwhile, BB&T has been pushing to collect on its $9.5 million loan to Ghost Town. The current owners took out the loan to buy the park in 2007 and make major repairs. A frustrated BB&T has been calling for a court-ordered liquidation of Ghost Town, essentially a forced sale of the park to pay off its debts.

Ghost Town chose not to put up a fight in bankruptcy court last week and instead agreed to let BB&T start the wheels of foreclosure with one caveat: that it not take place before June. The move bought Ghost Town owners three months to continue their hunt for funding.

“They are going to try to put together some sort of financing,” Gray said.

Gray said it takes $250,000 to $300,000 to open the park for the season. Most of that goes to hire some 200 employees and pay their salaries until revenue from ticket sales starts to roll in, and to spruce up the grounds and get everything working again.

Ghost Town was supposed to formulate a plan on how it would emerge from bankruptcy and repay some $13 million in debt. Such a reorganization plan is required by the bankruptcy court.

The park owners came up with a plan that requires $2.3 million in new equity this year in order to pull off a reorganization, according to the bankruptcy administrator. But the plan fails to say where the new equity will come from. Gray said the park owners need more time.

Gray said Ghost Town will revise its reorganization plan — which faced serious court objections anyway — and present a new one if it can find the necessary capital.

If that doesn’t happen by June, Ghost Town will be sold to the highest bidder. CEO Steve Shiver could not comment on negotiations with potential investors but is positive about the eventual outcome.

 

What will become of Ghost Town?

If Ghost Town can come up with a new, viable plan between now and the June foreclosure proceedings, BB&T will likely be willing to work with Ghost Town and halt the foreclosure, Gray said. If Ghost Town is sold in foreclosure, it is unclear whether it would fetch enough to cover what BB&T is owed.

Ghost Town includes 288 acres and a collection of amusement park rides. Often with foreclosures, the bank holding the mortgage ends up owning the property.

“Do you think BB&T wants it?” Grey asked. “It’s the tar baby. What are they going to do with it?”

Prospects of a buyer are complicated by a mudslide originating from Ghost Town’s property last month. Who’s liable for the cleanup and stabilization is still being debated.

Maggie Valley Mayor Roger McElroy just hopes that it stays an amusement park rather than getting turned into a real estate development.

“Whoever can make a go of it will be what’s best for the town, whether it is this group or another group,” McElroy said.

Ghost Town is zoned commercial by the town. Residential is not allowed without an exemption. If a future owner wants to turn the mountaintop into a residential development, they would have to seek an exemption from the town zoning board of adjustment.

When Ghost Town’s current owners appeared on the scene in 2007, the park had been closed for five years.

“A lot of motels and restaurants were hanging on by the skin of their teeth. When Ghost Town opened back up, it made a difference,” McElroy said.

Lacking start-up capital for the season is not new, however. Ghost Town faced the same problem last year. Ghost Town CEO Steve Shiver went on an extensive but unsuccessful hunt for public funding from the Town of Maggie Valley, and courted numerous local and regional tourism and economic development entities but to no avail.

The town was unwilling to pledge tax dollars to help the struggling amusement park reopen with no guarantee it would be paid back. Investors, many of them Maggie Valley business people, chipped in to provide the capital to get the park open.

Brenda O’Keefe, owner of Joey’s Pancake House, invested in the park’s new owners out of her love and devotion for Maggie Valley. For four decades, Ghost Town was an anchor attraction that pulled tens of thousands into Maggie Valley each summer and fall. Like so many, O’Keefe was eager to see it reclaim its former glory.

“Was I 100 percent sure it was going to make it? No. But the motel owners have to have people come into Maggie Valley and stay overnight to make it,” O’Keefe said. “I am a member of this community, and I want to see it thrive.”

So she and others stepped up to the plate.

When Ghost Town reopened in 2007 after five years of being closed, it garnered lots of media attention. Now, it could be worse than if it had never reopened at all.

“A closed amusement park is one thing. A failed amusement park is much worse,” O’Keefe said.

Feedback from customers who had visited Ghost Town was all positive this year, which hasn’t always been the case, O’Keefe said. O’Keefe said that shows the park and its employees were trying their hardest to provide tourists with a positive experience. O’Keefe believes the park is almost where it needs to be, but has been a victim of the economy.

“If you got the figures for all theme parks last year, it wasn’t good,” O’Keefe said. “Everybody’s figures were way down. It is not just Ghost Town.”

O’Keefe credits Ghost Town CEO Steve Shiver for doing all he could.

“He has worked very hard to try to keep it going. He has put a lot of money into it certainly more than anyone else,” O’Keefe said. “It is just a matter of having enough capital to go forward. It has always had a problem of being undercapitalized.”

Like McElroy, O’Keefe is concerned about the impacts to Maggie Valley business owners if Ghost Town doesn’t open this year.

“We are very distressed about it,” O’Keefe said, adding that it is time for the town to get creative. “We are certainly going to be looking for something else to bring people to Maggie. We are not going to sit on the sidelines.”

 

Ghost Town buys time to find financing

When Ghost Town agreed to a June foreclosure by BB&T, what could have been a lengthy and dramatic courtroom showdown last week was reduced to less than five minutes.

Had Ghost Town pushed ahead with the reorganization plan in its current form, it’s unclear whether a judge would have approved it. It faced serious hurdles due to inadequacies, according to Alexandria Kenny, a federal bankruptcy administrator who works for the bankruptcy court.

Kenny wrote in her objection that the plan is “vague, ambiguous and not feasible,” and even called one portion “absurd.”

A handful of major stakeholders objected to the plan.

BB&T claimed the plan was not proposed in “good faith.” BB&T also objected to the general way Ghost Town has conducted itself during bankruptcy proceedings. Ghost Town’s reorganization plan was slow to materialize, requiring several court extensions. It has repeatedly failed to meet other court-imposed deadlines for filing various financial documents.

Failure by Ghost Town to pay its taxes in 2009 led both Haywood County and the town of Maggie Valley to object to the reorganization plan. Both are still owed taxes from 2008 as well.

Everyone owed money by Ghost Town could vote on the plan. Other than BB&T, there are 225 companies collectively owed $2.5 million from Ghost Town for everything from radio ads to souvenir merchandise to plumbing parts. Of those, 90 sent in ballots and 84 voted in favor of the reorganization, Gray said. It’s not surprising since those companies stand at the back of the line. Under a foreclosure or liquidation, the park’s 288 acres would have to sell for more than $10.5 million before those companies saw their first nickel.

Under reorganization, Ghost Town proposed paying back those 225 companies starting in summer 2011 based on a 6.5 percent cut of the park’s revenue. Kenny objected that Ghost Town should pledge a specific minimum dollar amount it would pay each year.

 

Still piling on debt

While in bankruptcy protection, Ghost Town got a hiatus from bill collectors and old debt. But the park continued to rack up new debt during 2009.

Financial filings show past due bills of more than $400,000 still lingering from last year. Some are for goods and services rendered, like attorney’s fees, termite exterminators and a marketing consultant.

But there are also hefty utility bills. Ghost Town owes a water bill of $4,430 and power bill of $20,000, both of which were cut off due to failure to pay at the end of the season last year. It owes AT&T $2,000.

Other past due bills from 2009 include $85,000 in property taxes to the town of Maggie and Haywood County. Both are still owed taxes from 2008 as well.

Ghost Town also owes the state $10,500 in sales tax from 2009 and $4,800 in amusement tax. It owes the IRS $2,300.

In addition to $400,000 in past due bills from 2009, Ghost Town owed investors and partners $712,000 that was put up over the course of the year. Ghost Town has listed the $712,000 from as part of its debt to be repaid.

Ghost Town’s current reorganization plan forecasts the park would continue operating at a loss until 2013, even with the infusion of new equity to the tune of $4 million over the same three year period, according to the bankruptcy administrator.

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