Southern Golf Partners, LLC (“Southern Golf” or the “Debtor”) filed a petition on January 20, 2010 in the Bankruptcy Court for the Northern District of Georgia (case number is 10-61636) for relief under Chapter 11 of Title 11 of the United States Code. Whether the case will generate bankruptcy preference claims will largely be determined by the direction of the case – if the Debtor seeks to sell its business operations under a Section 363 sale the events leading to the bankruptcy would seem to make it a ripe for bankruptcy preference actions to be brought. In the initial stages, however, this case seems focused on rejection of leases.
The case has been assigned to Judge C. Ray Mullins. The bankruptcy petition was signed by A. Boyd Simpson as Sole Manager of the Debtor. The Debtor’s bankruptcy counsel is J. Robert Williamson of the firm of Scroggins & Williamson of Atlanta, Georgia.
We have provided a courtesy copy of the Southern Golf Docsheet™ Report for further contact information for the Debtor’s counsel and the U.S. Trustee assigned to the case and “first day” docket entries in the bankruptcy. The Southern Golf Docsheet™ Report will be updated periodically to identify subsequent developments.
Background of the Debtor
Southern Golf is headquartered in Atlanta, Georgia. Southern Golf’s First Day Motions included the following description of its business:
Southern Golf filed the affidavit of A. Boyd Simpson, the Debtor’s Sole Manager (the “Simpson Affidavit”) in support of its first day motions. The Simpson included the following description of Southern Golf’s business:
The Debtor is engaged in the retail golf equipment and related apparel business and currently operates nine (9) retail stores in Georgia, Florida, North Carolina, and Alabama. The Debtor maintains its headquarters in Atlanta, Georgia. The remaining operating store locations are located in: (1) Daphne, Alabama; (2) Aberdeen, North Carolina; (3) Martinez, Georgia; (4) Macon, Georgia; (5) Lake Park, Georgia; (6) Leesburg, Georgia; (7) Panama City Beach, Florida; (8) Destin, Florida; and (9) Ocala, Florida.
The Debtor identified the following as trade names: U.S. Golf; Florida Golf; The Golf Doctor; Southern Eagle Golf.
Trade Debt; Secured Debt Picture
The petition’s “Statistical/Administrative Information” estimates that there are between 100 and 199 creditors, the debtor has assets of more than $1 million and less than $10 million and liabilities of more than $1 million and less than $10 million. The first day motions and the Simpson affidavit provide additional details.
Southern Golf’s primary secured creditor is State Bank and Trust Company (“State Street”). The Debtor estimates that the total obligations to State Street are approximately $3 million.
Southern Golf also identified two other lenders that may claim secured positions in certain of the Debtor’s assets. The Debtor explained that
Tailor Bilt Golf Inc. (“Tailor Bilt”) may assert a lien, junior to that of State Bank on the Debtor’s inventory in two of the Debtor’s retail locations, and a blanket lien on the Debtor’s remaining assets with respect to such two retail locations. Further, Acushnet Company (“Acushnet”) may assert a lien, believed to be junior to that of State Bank and/or Tailor Bilt, on certain specific inventory of the Debtor.
In a signal that does not bode well for the general unsecured creditors, the Debtor goes on to state that: “As the Pre-Petition Indebtedness greatly exceeds the value of the Inventory, the Debtor believes that Tailor Bilt and Acushnet are effectively unsecured creditors, and that any liens they may assert have no value.”
The Debtor provides no detail as to the amount or nature of its general unsecured debt. However, consistent with its multi-location retail business, the Southern Golf list of top 20 unsecured creditors is heavily populated with creditors who are likely landlords. Out of the Southern Golf’s 20 largest unsecured creditors, no fewer than 12 are identified as being claims in the nature of real estate leases. These 12 creditors are owed in excess of $540,000. See complete list of the “Top 20 Unsecured Creditors” below.
Target of the Bankruptcy
Southern Golf’s initial filings strongly indicate that one primary objective of the Southern Golf’s restructuring will be the rejection of leases from unprofitable (and already vacated) locations. The Debtor explained that
The Debtor is party to a total of 19 leases of non-residential real property where it does or once operated retail stores. The Debtor has closed ten (10) of its unprofitable store locations in an effort to reduce costs.
The closed locations are in Greenwood, South Carolina; Martinez, Georgia; Columbus, Georgia; DeLand, Florida; Gainesville, Florida; Marietta, Georgia; Foley, Alabama; Lumberton, North Carolina; Pensacola, Florida; and Savannah, Georgia.
As part of its first day motions, the Debtor moved for the entry of an order, pursuant to §§ 105(a) and 365 of the Bankruptcy Code and Federal Rules of Bankruptcy Procedure 6006 and 9013, authorizing the Debtor to reject the leases on the ten closed locations.
Collateral Damage to Suppliers and Other Trade Creditors
The Debtor has not filed any motion for authority to pay the pre-petition claims of critical vendors or foreign vendors, as has become common in filings in Delaware and New York. Even if such a motion had been made, compared to bankruptcy courts in Delaware and New York, Georgia bankruptcy courts are unlikely to approve such motions.
Suppliers may wish to focus on the remedies expressly afforded suppliers under the Bankruptcy Code, and most notably, a reclamation claim and a 503(b)(9) administrative priority claim.
Top 20 Unsecured Southern Golf Partners Creditors
On January 25, 2009, Southern Golf amended its list of 20 larges unsecured creditors. The following is the amended list. None of the claims were listed as contingent, unliquidated, disputed or subject to setoff. Accordingly, the column that would contain that information has been deleted. The following list also does not include any creditor contact information that may have been included by the Debtor.
|Name of creditor||Nature of claim||Amount of claim|
|Callaway Golf Company||Trade||$282,036.36|
|WEIR, LLC||Real Estate Leases||$121,275.00|
|Paradise Golf Equipment Inc.||Trade||$80,438.71|
|West Volusia Investors, LLC c/o Victory Real Estate Investments, LLC||Real Estate Leases||$75,314.12|
|Chatham Plaza, LLC c/o Kimco Realty||Real Estate Leases||$65,701.17|
|Ben-O-Fred, Inc.||Real Estate Leases||$48,571.25|
|Britt, Ernest||Real Estate Leases||$37,515.95|
|MP Realty Partners I, LP c/o Equitable Management||Real Estate Leases||$35,626.23|
|DSJ Properties, Inc.||Real Estate Leases||$32,021.37|
|Hallberg, Victor||Real Estate Leases||$30,000.00|
|Nicklaus Golf Equipment||Trade||$27,652.41|
|PRE/Lake Park(GA), LLC c/o Ariel Preferred Retail Group, LLC||Real Estate Leases||$25,165.00|
|Anderson, Hubert A.||Real Estate Leases||$24,026.25|
|Adams Golf LTD||Trade||$23,985.13|
|Black, Daniel||Real Estate Leases||$23,325.65|
|Taylor Made Golf Company, Inc.||Trade||$22,729.06|
|J.A. Lankford & Co.||Real Estate Leases||$21,621.57|
|Heavy Putter, LLC||Trade||$18,841.00|
The Top 20 List does not include: (1) persons who come within the definition of “insider”; or (2) secured creditors, unless the value of the collateral is such that the unsecured deficiency places the creditor among the holders of the largest unsecured claims.
The Top Unsecured Creditor List is never to be considered a waiver of any defense to or “allowability” of a listed claim or an admission of the amount of any listed claim. It is common for the amount of the claims to shift and sometimes a claim that is initially is undisputed is later disputed. Creditors should always consult the official claims register.