ArrowCreek could close unless suit dropped

BY MARTHA BELLISLE • and lauren gustus • September 16, 2008

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Seeking to avoid bankruptcy or closure, a group of ArrowCreek Country Club homeowners was trying Monday to reach a settlement between a buyer and the management company that owns the country club and its two golf courses.

Officials from ArrowCreek Golf Holdings, owner and operator of the upscale club in south Reno, threatened to close the club unless 14 equity members dropped their 2006 lawsuit seeking to block the sale of the club, refund of their money and that the club be placed into receivership.

The club was closed Monday for an employee “play day.”

“What I want to make clear is that my group is trying to be as reasonable and business-like and fair as they can, so this club can continue to operate,” said Mark Gunderson, the lawyer for the members who sued the club owners and Westerra Management.

The group contended in the lawsuit that Westerra and

ArrowCreek Golf Holdings had said the club would be private and member-owned and had permitted facilities to deteriorate so that equity fees had dropped more than $20,000.

In a Sept. 10 letter, Westerra told ArrowCreek it had accepted an offer from Golden Gate Golf to purchase the club but said the lawsuit must be dropped before they would sell.

“Your Advisory Board endorses the transfer of ownership between AGH (ArrowCreek Golf Homeowners) and Golden Gate Golf,” the letter said. “Furthermore, the board urges AGH and the litigants to resolve their differences in an expeditious manner that will ensure the continued operation of our Club and avoid the likelihood of an immediate bankruptcy filing.”

Gunderson said his clients met with Golden Gate Golf during the weekend and presented a settlement offer to ArrowCreek on Monday morning.

Under the terms of the purchase agreement, Golden Gate Golf had to make a nonrefundable deposit by Monday. If the three parties accepted the settlement, the sale would proceed. If not, the course could remain closed.

Neither Gunderson nor Stephen Mollath, the lawyer for ArrowCreek, responded to calls or e-mails Monday.

Westerra entered into a contract with members in 2002 that allowed them to purchase equity (up to $60,000 for their shares) in the club as they worked toward an eventual takeover, a common practice with country clubs.

Under the plan, the takeover would be complete when members secured 750 equity partners and the club was operating in the black. The club, which opened in 1999, would be responsible for any deficits until the takeover was complete, Gunderson said.

In 2006, the club had

450 members and was operating at a deficit of $1.5 million annually, Gunderson said. Although the numbers in the contract had not been met, the club decided to turn it over to members, some of whom objected. A settlement seemed imminent when the club said it would sell to Club Corp of America, a Dallas-based corporation that is one of the largest golf course operators in the country.

The deal fell through

Aug. 29, Gunderson said.

“Three days later, we got the demand from ArrowCreek to drop the lawsuit, or they would shutter the club or declare bankruptcy,” he said.

The members began talks with Golden Gate Golf and “were comfortable with them,” Gunderson said.

ArrowCreek has two private golf courses, one private and one semi-private, designed by Arnold Palmer and Fuzzy Zoeller/John Harbottle III, in addition to swimming, tennis and a clubhouse.

Filed under: ARROWCREEK