Falls resort given more time to sort out finances

  • May. 25, 2011 8:00 a.m.

by Robert Freeman

Black Press

The Falls golf resort in Chilliwack got three more months of bankruptcy protection last week and additional funding to continue its operations, Rick Wellsby, resort president, said after a May 17 court hearing.

“That’s good news for us,” he said. “It gives us time to continue along with our restructuring program.”

How the extension to Aug. 28 sits with wedding planners and golfers remains to be seen, however.

One irate father who pre-paid $7,500 for his son’s August wedding at The Falls was furious when he was asked for an additional $3,000 with no guarantee the resort would still be operating in August.

Another who booked the resort for an August wedding said he was asked to pay $3,600 more or the event would be cancelled.

Golfers who paid for memberships were also told they’d have to pay extra for each round of golf played at the resort.

But the additional payments were ordered by a court-appointed monitor to ensure the resort lost no more money after Wellsby – the president of Blackburn Developments Ltd. – filed for bankruptcy protection in February after falling $75 million in debt.

Wellsby said the monitor was initially not going to allow the resort to honour any of the weddings because of possible financial losses, if revenues from the events, like liquor sales, did not cover costs.

Mike Erickson, The Falls’ operations vice-president, said he met with wedding groups before last Tuesday’s court hearing to assure them their weddings would go ahead, even if the resort closed because of bankruptcy.

He said the resort had an arrangement with the owner of the clubhouse where the wedding receptions are held to make it available to the pre-paid groups.

“I don’t blame people for being uneasy,” he said, adding that the request for additional payment “doesn’t feel fair, and it’s not.”

But the resort’s hands are tied in the face of the court order, he said.

Erickson also pointed out that the additional charge “essentially” means that wedding groups are simply losing part of a discount of up to 20 per cent that they had received for early payment.

Meanwhile, Wellsby said restructuring of the troubled resort’s finances has “made a lot of progress in the last three-month period” under bankruptcy protection.

However, the monitor continued to make plans to market and sell the hillside resort that includes a 233-acre golf course and 71 acres of development lands approved for up to 2,989 residential and commercial units.

The monitor’s last report on May 13 also noted that the cold, rainy weather this spring had driven the resort’s golf revenues “significantly lower” than projected.

The company also continued to need financial help to cover the costs of day-to-day operations and professional fees, the monitor reported, and its cash flow “suffered” from the “lower than anticipated revenues” and required expenditures like $120,070 in property taxes.

An initial $1-million in funding granted back in February was “exhausted” before additional funding was approved.

Wellsby said either bankruptcy officials will now find a buyer for the resort, or accept a proposal he is putting together with a partner.

“We’re certainly hoping it’s our proposal that goes forward,” he said.

That proposal involves setting up a new “debt-free” company, with new directors and shareholders – who will ultimately decide if they want Wellsby back at the helm.

But after working for the last 21 years on getting the resort up and running – and keeping it there – Wellsby said he wouldn’t be “disappointed” to take a less demanding role.

“I’d welcome not spending three-quarters of my day on how we raise money,” he said. “This would be a breath of fresh air for me.”

rfreeman@theprogress.com

 

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