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Diablo Grande to request continuance of bankruptcy hearing |
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Written by James Leonard | Patterson Irrigator
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Monday, 18 August 2008 |
WEB EXCLUSIVE - Last updated 2:30 p.m. Aug. 18
Diablo Grande will request a continuance of a Tuesday bankruptcy court hearing at which it had initially hoped its sale would be approved, according to a notice filed with the court Monday.
The troubled golf resort and housing development will ask for the postponement at the start of Tuesday’s hearing, still set to begin at 9 a.m. in the U.S. Bankruptcy Court in Sacramento. The hearing was supposed to be the moment when Diablo Grande unveiled its winning bidder. A price of at least $26 million likely would have garnered approval of the sale and a settlement between Diablo Grande and its numerous creditors.
According to Monday’s filing, Diablo Grande received notices of intent to bid from four potential buyers. An unspecified number of those four ultimately sent bids along with the required $500,000 deposit by Wednesday’s deadline.
But apparently those bids did not meet the terms of a “qualified bid” as outlined in the bid procedures filed last month. So now Diablo Grande is requesting more time to change and clarify certain terms in order to qualify the bids.
Diablo Grande attorney Michael Ahrens and vice president of development Dwain Sanders did not immediately return phone calls Monday afternoon.
Among the information not included in Monday’s notice was: how many actual bids were received, though it apparently was at least two; what aspects of those bids made them unqualified; and how much time Diablo Grande will request for its discussions with the potential buyers.
The requirements for a qualified bid were spelled out in a July 24 filing and are roughly as follows:
- The bidder must be able to give adequate assurance and provide information to prove that it will be financially able to purchase Diablo Grande and to assume contracts like the one with Western Hills Water District, which provides water to the development.
- The bidder must agree to purchase all of Diablo Grande’s assets, including all of the property and governmental permits, and assume its contracts. This requirement does allow for changes to be made the asset purchase agreement but says that the agreement must remain as favorable to Diablo Grande and its creditors as the initial agreement was.
- The bid cannot be contingent upon the bidder performing due diligence, receiving financing or getting the approval of its board of directors, shareholders or anyone else.
- The bid must be accompanied by a $500,000 deposit. Losing bidders would have their deposits refunded.
Diablo Grande has taken out more than $2 million in loans in order to continue operating during the bankruptcy sale process. It is unknown how much longer those funds will last.
A financial summary for the month of July filed with the bankruptcy court showed Diablo Grande with expenses totaling $622,559 and revenue of just $31,396 — though the company came out slightly ahead for the month thanks to a loan amount of $657,456.
The expenses included more than $400,000 that was transferred into an account for accrued and unpaid professional fees. The financial summary showed Diablo Grande’s cash balance at the end of July at $118,921.
To contact James Leonard at the Irrigator, call 892-6187 or e-mail
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The Sale looks to have serious issues along other problems with Violla and the HOA.