Cliffs bankruptcy bid process coming to end

        If you were contemplating a bid for the bankrupt Cliffs Communities, your time has come and gone. Term sheets, which outline the details of an offer, were due on Friday, and qualified bidders were to be identified by yesterday, according to the schedule set by the bankruptcy court in Greenville, SC. Saturday is the deadline for more definitive documents to be submitted by bidders, including a membership plan; those docs will determine if the bidders are “qualified.” If more than one qualified bidder emerges, an auction will be held within a few days. On April 28, the successful bidder –- if an auction is held -- will be notified.

        Observers close to The Cliffs believe that the consortium of the Carlile Group, Arendale Holdings and Urbana will wind up with the prize. Penny and Steve Carlile are the possessors of deep pockets as well as property at The Cliffs; Arendale is a subsidiary of the Jacksonville, FL-based Stokes Group, a development company; and Urbana owns a large bit of the

undeveloped dirt across the communities, courtesy of a deal the company did with financially strapped Cliffs founder Jim Anthony. A lawsuit alleging fraud that Anthony filed against Urbana is still pending and could potentially make a mess of things. Unless Anthony is out for blood, the betting here is that case will be settled before the successful bidders begin to execute their plan.

        One other potential messy detail is that any successful bidder must negotiate a settlement with the Cliffs residents who loaned Jim Anthony $64 million to complete construction of promised amenities, including the Gary Player golf course at the community known as Mountain Park. The Carlile group is already negotiating with the group of note holders; however those negotiations turn out, one thing is certain: The terms for the note holders will be nowhere near as generous as Anthony offered (including a seven-year, 12% return on their $100,000 increments). Given that Anthony was able to return only around $7 million (in one annual payment), the note holders may be content with any arrangement that is close to reasonable. However, the bankruptcy court appears to have the last word on how secured debt (the note holders) as well as unsecured (e.g. membership deposits to non-note holders as well) is repaid.

        According to one Cliffs member, a schism between the note holder and non-note holder groups is probably exaggerated.

        “Many non-note holders do not think the note holders need to simply suck it up [the Anthony loan] as a bad investment,” he told us. “There is recognition…that the note holders gave the clubs more time to keep the lights on.”