RANCHO MURIETA, CA (MPG) - Six months after Rancho Murieta Country Club members voted overwhelmingly to authorize the Board of Directors to initiate bankruptcy proceedings, they were notified that the process might soon be initiated.

“It is my pleasure, on behalf of your Board of Directors (BOD) that an update on the Club’s pending bankruptcy is finally here,” President Eric Dutton wrote in a July 1 email.

“The BOD met with Carol Ward and Tony Velez representing Rancho Murieta Properties (RMP) prior to its regularly scheduled board meeting on Thursday, June 27th. The purpose of the meeting was to inform the BOD on the status of a sale agreement so the club could move forward with our bankruptcy.”

The club doesn’t own the two golf courses or the other facilities; instead, it operates under a 55-year lease with Rancho Murieta Properties, which expires in 2028. Ward, who owns the Murieta Equestrian Center, is a major investor in Rancho Murieta Properties, and Velez is the chief operating officer. 

The same investment group, previously represented by the late John Sullivan, developed the hotel and the Bel Air shopping center and is continuing to seek Sacramento County approval for the Rancho North development that includes 697 lots.   

The July 1 update stated that the board would now finalize the necessary documents and submit the bankruptcy package. 

“In the meantime, efforts in preparation for the transition to RMP will start taking place,” Dutton wrote. “We were informed that Troon (a large golf management company) is contracted to complete a full assessment of the club’s facilities, grounds, and operations.”

Dutton said the assessment was expected to take 45 to 60 days and would begin soon, although he didn’t have a start date. 

“Other assessments will occur to assist with the transformation of the entire facility,” he said.

As for the bankruptcy process timing, Dutton said their bankruptcy attorney told them in January that once the club’s package is submitted, “we will be at the mercy of the Federal Bankruptcy Courts and the workload of the judge it is assigned to.” 

The River Valley Times tried to reach Dutton for more details about the sales agreement and the transition to Rancho Murieta Properties, but he didn’t respond by press time to a text or a phone message.

The River Valley Times reached out to Velez for clarification about the sales agreement and to ask whether Rancho Murieta Properties would take over the club or sell it to another party.

Velez confirmed there was no sales agreement in place yet. Regarding potential directions, Velez said, they had received offers both ways but haven’t formalized anything.

“These are just thoughts at this point and discussion on both sides: selling it to a company, doing a joint venture (JV) or us taking over,” he said.

Asked about the country club’s transformation, Velez referred to the Troon assessment.

“If we do decide to either take over a transfer or a JV, they would be running the golf course for us,” Velez said. “Again, that would not be set in stone.”

The River Valley Times also contacted board member Tom Barentson. He said the board’s meeting with Ward and Velez on June 27 had been very positive and many options were discussed.

Barentson said that a sales agreement was “coming together” and that he understood a sales agreement would be needed so the club could move forward on the bankruptcy. 

“I don’t know how it is going to work out,” Barentson said. “But it seems like people are working together to make the best possible situation for the community.”

Dutton first notified the membership that the board was considering bankruptcy as an option to resolve the club’s dire financial circumstances in a Dec. 1 email. He said that the board was also proposing two other options: one involves cost-cutting measures to meet the 2024 budget and the other would increase member dues by $150 a month. Dutton explained that these two options would only allow the club to tread water until the lease ends.

On the other hand, the third option involving bankruptcy would be about starting over.  

“The entity known as the Rancho Murieta Country Club would cease to exist,” Dutton said in December. “A new entity would take its place and be run by a professional with experience operating a successful country club with all the amenities, energy and positivity that one should expect from the centerpiece of the community.”

Many potential buyers have been interested in doing exactly that. 

“None are interested in doing so unless the facilities are free of any successor liability, whether it be the unions, other creditors, or our membership bylaws,” he wrote. “In the past, any contemplated sale has failed primarily because of withdrawal liability to the unions. Until recently, not even bankruptcy could alleviate this situation.”

“However, there is a new provision in the bankruptcy code under Chapter 11 subparagraph 5 that will permit us to sell our interest in the remaining lease term, the club’s only true asset, bundle that sum with any other cash on hand, and present a compelling case to the bankruptcy court to dismiss all of our creditors’ claims,” Dutton explained in his December email. 

If that happens, several individuals competing to buy and improve the club could do so free of the conditions that prevented past sales. 

“At the end of the day, it’s about improving our experience as members and maximizing our property values,” Dutton wrote. 

“Our best opportunity to do that is to allow the sale of the club to someone with the resources to invest in improving the facilities and the know-how to manage a private country club.”

Following Dutton’s Dec. 1 update, the board convened a town hall meeting on Dec. 12 to present the three options to keep the club operating and to explain why filing for bankruptcy would have the best chance for success. The meeting drew about 300 attendees.

After the board conducted a subsequent electronic vote on the options between Dec. 18 and Dec. 22, the membership voted overwhelmingly to authorize the board to initiate bankruptcy.

When contacted by phone after the vote, Dutton told the River Valley Times that the timing for the board to initiate the bankruptcy process would be dependent on their bankruptcy attorney. “When he says quite clearly that you are not going to stay afloat for whatever amount of time, that will help us decide where that financial point is,” Dutton said.