CONYERS - Cherokee Run Country Club, located inside the Georgia International Horse Park, has filed for bankruptcy, listing the city of Conyers as its largest creditor.
According to the Nov. 25 filing in the U.S. Bankruptcy Court Northern District of Georgia, Cherokee Run, operated by Jong Kyu Kim, filed for Chapter 11 bankruptcy and estimated it had less than 50 creditors.
The city of Conyers owns the country club and golf course located at 1595 Centennial Olympic Parkway and leased the property to Kim in December 2006.
The golf course was designed by Arnold Palmer in 1995, just prior to the 1996 Olympics.
According to the bankruptcy filing, Cherokee Run owes Conyers $2.6 million.
Ingersoll Rand Financial Services Company, based in Irving, Texas, is the next-highest creditor, claiming Cherokee Run owes it $153,000 in lease payments for golf carts.
Cherokee Run also owes Rockdale County $56,505 in real property tax for 2008.
The list of creditors holding the 20 largest unsecured claims indicates that the company's debt to Conyers is the only one "disputed or subject to set off."
According to City Manager Tony Lucas, Conyers officials dispute that Kim owes the city $2.6 million and said the figure is actually closer to $700,000.
"The vast majority of the ($2.6 million) is the loan he took out prior to signing the lease agreement to satisfy the previous leaseholder ... it's the money he borrowed to get into this business," Lucas said Thursday.
Lucas explained that Kim took over a 50-year lease in 2006, at which time 41 years were remaining. As part of the lease agreement, Kim was to pay $1 million to the city at the time of closing for improvements the city made to the property. At the last minute, Lucas said, Kim asked if he could spread out his $1 million commitment over five years. The city agreed that Kim would pay $100,000 at closing, $200,000 to be due the next year, and so on until the debt was satisfied.
"He paid the $300,000 and the balance is $700,000. In fact, the next payment is due Dec. 6, which is Saturday," Lucas said.
Lucas said the city will have the opportunity to argue the amount owed when Kim appears before the bankruptcy court in the next couple weeks.
That said, the history between Kim and Conyers has been rocky.
Lucas said the lease agreement provided that Kim would pay the city a minimum of $50,000 a year. The payment structure was also to include percentages based on gross sales and total volume of rounds of golf played. Lucas said Kim has paid the city the minimum of $50,000 each year - but that's about it.
"We are not satisfied that what he is reporting to us is accurate," the city manager said. "We started a process 120 days ago where we placed him in default of his lease because of multiple things, mostly the condition of the golf course itself was not maintained to the standards documented in the lease agreement.
"He was to make corrections, then the next option, his bank was to make corrections. They had not, and then we filed a dispossessory notice with Mr. Kim. It was just after that he filed the bankruptcy," Lucas said.
Calls to Kim's office at Cherokee Run and to his attorney, Stephen Block in Atlanta, were not returned by press time.
Lucas said if the city prevails in its pursuit of the dispossessory filing, control of Cherokee Run golf course will revert to the city.
"We will retain all assets - golf course, the building - it will revert to the city, debt-free," he said.
"The first thing we'd do if that happens is assess its condition, operate it and market it."
The city also owns the property next to the golf course and club where a Hawthorn Suites operates. The two leaseholders - primary lease holder Hawthorn Golf Resorts LLC and sublessee Earl Wilson - took legal action against each other last year over repairs and upgrades needed to the facility. The city claimed the overall condition of the hotel building had deteriorated over the past years and had fallen below the acceptable standard called for in the lease agreement.
Aimee Jones can be reached at email@example.com.