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Dismissal of Bankruptcy for Upscale Vineyards Resort, Yakima, Washington
Would Mean Foreclosure; Creditor Stark Onshore Master
Holding Seeks to Collect $12.9 million Delinquency

By David Lester, Yakima Herald-Republic, Wash.McClatchy-Tribune Regional News

Aug. 4, 2009--YAKIMA, Wash. -- Unless something changes in the next month, the Vineyards Resort bankruptcy case will be dismissed.

The dismissal would mean foreclosure for the property that was to be the site of a $100 million wine-themed destination golf and residential complex southeast of Yakima.

An attorney for the company planning the development said during a court hearing Monday that its backers still have not been able to put together a reorganization plan to resurrect the project that will satisfy its major creditor, a Milwaukee, Wis., hedge fund.

Ford Elsaesser of Sandpoint, Idaho, representing Vineyard Property LLC, told Judge Frank Kurtz an agreed order dismissing the bankruptcy will be effective Sept. 4.

But, Elsaesser said, "a couple of things" could happen that would make dismissal in no one's interest.

He did not elaborate and did not return telephone calls seeking clarification.

Should the dismissal not occur as proposed, Kurtz set Sept. 29 as a date for a hearing on the dismissal.

The creditor, Stark Onshore Master Holding, in May sought to have the case dismissed, freeing the firm to proceed with foreclosure on the property.

The firm, which is trying to collect on a delinquent $12.9 million loan made in 2006, claims its interest in the 500-acre property along Nightingale Road is eroding and the developers have shown no ability to complete the project.

Stark is now seeking a judgment against the five guarantors of that loan in Yakima County Superior Court.

Among the guarantors are builder Craig Schultz of Yakima; Gary Scott of Ellensburg; Rich Barnes and Daniel Fitchett, owners of a Colorado resort development firm; and Lee Burrington, a Montana resident.

Vineyards had been proposed as a sprawling development to include an 18-hole golf course, more than 500 residences, a hotel and retail center. But developers filed for bankruptcy protection last November to gain time to keep the project afloat.

In a case separate from the bankruptcy, Vineyards has reached a proposed settlement with a Georgia firm hired last year to help Vineyards obtain financing.

Vineyards is seeking a return of $3.2 million in funds put up by the initial purchasers of lots in the development as a fee should the firm, Dincom Inc., obtain $80 million to complete the project's first phase.

No funding was found and Vineyards had to file for bankruptcy because it could not meet payments to Stark.

In court papers, Vineyards contended the $3.2 million was improperly transferred to Dincom's control in violation of the agreement since no funding was made available.

Court records in the case show Dincom has agreed to repay the money in installments. A hearing on the compromise is set for Aug. 17.

--David Lester can be reached at 509-577-7674 or dlester@yakimaherald.com.

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To see more of the Yakima Herald-Republic or to subscribe to the newspaper, go to http://www.yakima-herald.com/.

Copyright (c) 2009, Yakima Herald-Republic, Wash.

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