Joseph Bellinger Quoted in Baltimore Business Journal

Joseph Bellinger, Chair of Offit Kurman’s Bankruptcy And Restructuring Practice Group, was quoted in Baltimore Business Journal article titled “Recession, Legal Woes Lead to Clearview Sale.” To read a full copy of the article, click here.

Recession, legal woes lead to Clearview sale

8:06 pm Wed, November 13, 2013 Posted: 8:06 pm Wed, November 13, 2013 By Danny Jacobs The Daily Record Daily Record Legal Affairs Writer

The winning bidder in Friday’s foreclosure auction of Clearview at Horn’s Point will receive 130-plus acres overlooking the Choptank River in Cambridge, an 18-hole golf course, a restaurant available for events and two pools.

It’s a layout many residents in Dorchester County hope will remain. “Housing is everyone’s fear,” said Allen Nelson, a former executive director of the Dorchester County Chamber of Commerce and lifelong county resident. “Most local people here feel it’s better served as a golf course.” Clearview at Horn's Point Bill Hudson, vice president and general manager of Atlantic Auctions in Bel Air, described the 130-acre complex as ‘a nice golf course on the Choptank River’ with a restaurant and space to hold events. Area residents are hoping it stays that way. Friday’s auction is the latest in a series of setbacks for the former Cambridge Country Club, including environmental fines and a guarantor’s bankruptcy. But those involved in the legal matters say Clearview’s demise ultimately was caused by the Great Recession. “It’s another example of the economic downturn,” said Joseph J. Bellinger, a principal with Offit Kurman P.A. in Baltimore who has represented the club in the foreclosure proceedings. “This is a resort activity people mindful of their budgets are cutting back on.” The defaulting owner, BSJ Partners LLC, was founded in May 2006 by Scott and Jeff Shilling, along with Scott’s wife, Heather. The company is a sister entity of Bay Country Communications Inc., a Cambridge cable company owned by the Shilling brothers. (Scott Shilling did not respond to a request for comment.) That June, BSJ Partners took out a $3 million loan from what was then the Bank of the Eastern Shore to own and operate the golf course, according to bankruptcy court records. Bay Country guaranteed that loan. The bank also was given a first priority lien on the property, according to court records. A second loan of $150,000 was taken out in August 2008 with additional guarantors, according to court records. BSJ Partners had “certain defaults on the loan” in 2011, according to bankruptcy court documents. But the bank agreed not to take action after BSJ added more guarantors to the loan, according to bankruptcy court documents. But the economic troubles continued, and the bank turned to Bay Country for payment under the guarantee. Bay Country voluntarily filed a Chapter 11 bankruptcy petition on Aug. 2, according to court records. Ten days later, the bank filed a confessed judgment against BSJ Partners for more than $3.1 million in unpaid loans, according to court records. Foreclosure proceedings against Clearview began Aug. 15 in Dorchester County Circuit Court. Bay Country agreed late last month to pay the bank $525,000 and dismiss the Chapter 11 proceeding in exchange for the lender’s dismissal of the confessed judgment against BSJ Partners, according to court records. Bay Country also relinquished any rights to the golf course and promised not to interfere with the sale or auction of the property, which has been in receivership since September, according to court records. Bellinger said BSJ Partners did not oppose putting Clearview into receivership and eventually foreclosure. “The golf course was so severely underwater it wasn’t worth attempting to salvage,” he said. The golf course and restaurant, called Mantra, have been open throughout the court proceedings and have been run since September in receivership by Crownsville-based Black Creek Consulting Ltd. Michael Schuett, Black Creek’s president, joked business was going pretty well “until people saw the ad” announcing the foreclosure auction. Schuett estimated the land is worth between $1.5 million and $2 million but said the sale price would depend on what the winning bidder wants to do with the property. The predecessor to Mantra did $1.5 million in business just four years ago, he said. But there is one item that will require a buyer’s immediate attention, Schuett said. “With new ownership, someone is going to have to do something with the outdated septic system,” he said. The septic system led to $500,000 in civil fines by the Maryland Department of the Environment. At trial, a judge ruled BSJ Partners had unlawfully constructed an underground conduit and discharged raw sewage directly into nearby wetlands — a shortcut that saved BSJ more than $400,000, the judge said. BSJ Partners appealed the ruling, according to state court records, and both sides agreed in March to lower the fine to $150,000. Schuett said any money spent repairing the septic system would count toward paying the fine. Schuett called the MDE action a “serious blow” to the ownership group. Nelson, the former chamber of commerce director, said the action “triggered” all of the issues that followed. “In my opinion, there were probably things done wrong,” said Nelson, who is also a club member. “But I think the state was trying to set an example. They came down hard.” Both Schuett and Bill Hudson, vice president and general manager of Atlantic Auctions in Bel Air, said they were hearing from people interested in bidding on Clearview. “This is a nice golf course on the Choptank River,” said Hudson. “It would provide a great opportunity for folks looking to not only operate a golf course, but an event location.” The property has zoning that allows for some low-density residential units, he added. But both Schuett and Nelson note there are several housing developments with vacant homes on the drive to the golf course, which is why Nelson is hoping for more tee times at Clearview. “It certainly can be an economic engine if run properly,” he said.