Two years after seeking bankruptcy protection to prevent the collection of a $1.4 million gender discrimination verdict and related legal costs, the club could be sold, as it has since lost 32 members with 59 charter members on an “exit list.”
The Spokane (Wash.) Country Club could be sold to settle its multimillion bankruptcy case as dozens of members quit and business slows in the aftermath of a gender discrimination verdict, the Spokane-based Spokesman-Review reported.
The club sought bankruptcy protection two years ago to prevent collection on the $1.4 million verdict and related legal costs, and the members have not coalesced around a strategy to keep their private golf club, the Spokesman-Review reported.
It all points to a possible sale, according to bankruptcy records filed Friday. Attorney Barry Davidson said the club is appealing the verdict as it searches for a way to survive bankruptcy. There have been several suitors, Davidson told the Spokesman-Review.
One offer described in the bankruptcy documents is a $1.85 million unsolicited bid from RMG Golf Course Management LLC acting “in concert with a group of Spokane area investors.” While the club has been approached, no offers have been accepted as the starting point for a future auction, the Spokesman-Review reported.
“Members want to see the club’s history preserved,” Davidson said. “They want to keep the legacy and pass it along to future generations to appreciate and enjoy.”
The discrimination lawsuit alleged a gender-based code at the club that denied women the best tee times and barred them from certain areas of the restaurant, even though the four women who sued paid the same fees. The suit, pressed by attorney Mary Schultz, also revealed boorish behavior by some men in the club that further devolved into ill-fated intimidation of the women, the Spokesman-Review reported.
Legal findings in the case also determined that the club, which is organized as a private nonprofit organization exempt from paying taxes, is a public accommodation because of its relative ease of gaining membership, golf supply sales to the public, and its allowance of nonmembers to use club facilities for events. Thus, the club was subject to state laws banning discrimination, the Spokesman-Review reported.
A Spokane jury stung the club with a $579,000 verdict in 2013, and Schultz later won a ruling ordering the club to pay her $773,000 in attorney fees and costs with interest accruing. The state judge overseeing the case took aim at the club, saying that even after the discrimination verdict it continued violating state anti-discrimination laws, the Spokesman-Review reported.
C&RB reported on the injunction that came after the lawsuit in August 2014 (“Court Orders Injunction Against Spokane (Wash.) CC“).
The club has suffered ever since: 32 members have left, putting a $320,000 dent in its balance sheet as the club redeemed the $10,000-per-member shares. While the club charter allows 370 full memberships, it now has 281. And of those, another 59 want out and have put their names on an “exit list.” The club doesn’t have to buy back those membership shares, but the list has created uncertainty about the roster and long-term financial outlook, the Spokesman-Review reported.
Schultz has said her clients wanted the club to change, not sell. But as the case continues and club members rejected a settlement offer two months ago to instead pursue its legal appeal rather than settling the case, Schultz has urged U.S. Bankruptcy Judge John A. Rossmeissl to approve a liquidation plan forcing the club to sell its course and buildings, the Spokesman-Review reported.
The club’s property, buildings and equipment are valued at $9.8 million, according to the club’s audited financial statements in 2013. That does not include the club’s liabilities, depreciation or the possibility of a distressed sale, which could shave millions off what could normally be raised in a sale of the club at auction, the Spokesman-Review reported.
A series of decisions regarding the club’s bankruptcy are expected later this fall, the Spokesman-Review reported.
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