Ghost Town at Maggie Valley and Steve Shiver Update ... by gimleteye

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Ghost Town bankruptcy hits dead end
Written by Becky Johnson
Ghost Town in the Sky has no hope of pulling itself out of bankruptcy, according to a federal bankruptcy administrator.

The court will decide this week whether to let the amusement park continue to languish in bankruptcy, where it has been stuck for two years now, or simply dismiss the case.

When a company is in Chapter 11 bankruptcy, it buys time from debt collectors while it attempts to get back on its feet. A company is not allowed to remain under bankruptcy protection indefinitely, however.

It must reorganize and present a viable plan for how it plans to pay off debt and continue operating. Or, it is forced into a liquidation, known as Chapter 7, where the assets of the company are sold off by the court and the money used to pay off the debts.

In this case, however, the bankruptcy administrator has recommended simply dismissing the case.

“The debtor has been totally inactive since June 2010 and there appears to be no chance of reorganization,” Linda W. Simpson United States Bankruptcy Administrator, wrote in court filings.

Two bankruptcy court hearings — one on reorganization and one on liquidation — have been on the docket for a year now. Each month, they have been continued.

Ghost Town has failed to file monthly reports as required by the bankruptcy court for the past year, nor has it paid quarterly bankruptcy court fees for the past 12 months. Meanwhile, Ghost Town’s bankruptcy attorney withdrew from the case in February after months of not being paid.

Once a tourism magnet in Maggie Valley, Ghost Town has been in bankruptcy limbo for two years now with debt topping $13 million. The park is also on the brink of foreclosure.

BB&T is owed $10.5 million dating back to the purchase of the park by new owners in 2007 and for subsequent repairs and upgrades.

The bank has initiated foreclosure against Ghost Town, and could auction off the property on the courthouse steps at any point in order to recoup what it is owed.

BB&T has held off on doing so at the urging of Ghost Town principals who want to save the park and have claimed for the past year that a financing deal is just around the corner.

The 288-acre mountain top property won’t fetch enough at auction to pay off all that BB&T is owed, which is likely why BB&T has stopped short of going through with foreclosure.

Meanwhile, the 200 small businesses collectively owed $2.5 million by Ghost Town — including dozens of local businesses left hanging after providing services or products — are out of luck. BB&T is first in line to get paid, and only if there is money left over after its $10.5 million is paid off does anyone else get money.

And that’s precisely why the bankruptcy court is poised to simply dismiss the case rather than go through the hassle of liquidating the company in a formal Chapter 7 proceeding.

“The liquidation value of the property is arguably less than what is owed the bank,” surmised David Gray, Ghost Town’s former bankruptcy attorney.