|By Ann Marie Ames, The Janesville
Gazette, Wis.McClatchy-Tribune Regional News
Aug. 8, 2009 - DELAVAN -- Lake Lawn Resort will operate as normal despite a $51.9 million foreclosure action filed against it this week by a Madison bank, General Manager Pete Zellmer said.
"This resort has been here for 131 years, and we will continue to provide outstanding service for years to come," Zellmer said.
The resort is in default on a $51.9 million loan, according to the summons and complaint filed Wednesday in Walworth County Court.
The resort owners have failed to pay real estate taxes, failed to meet the required number of pre-sale agreements on condominium units and failed to make required monthly interest payments since May, according to court documents.
The loan was taken out in September 2007 and was due in September 2010, according to the documents.
AnchorBank, Madison, has requested that the property be sold in a sheriff's sale within six months of a judge's decision on the foreclosure, according to court documents.
The bank also seeks a deficiency judgment for any money owed above and beyond what is earned in the sheriff's sale.
The owners of the resort owe the bank $34.34 million in principal, interest and late charges, according to court documents.
Liz Boelter, an Anchor Bank spokeswoman, would not comment because the case is in litigation.
The foreclosure was caused in part by the national banking crisis and economic woes, Lake Lawn wrote in a statement released Friday.
Lake Lawn noted in its statement that AnchorBank recently announced it has hired a chief risk officer following orders from regulators to monitor and improve its commercial loan portfolio.
Options for Delavan Resort Holdings, one of the owners of Lake Lawn Resort, include bringing in additional investors or lenders, or renegotiating or re-structuring its financing terms, according to the statement.
Sales for the condominiums, known as Villas of Harbor's Edge, were delayed because of current economic conditions and negotiations with city and other regulatory entities, according to the statement.
The summons and complaint refer to outstanding property taxes Lake Lawn owes Walworth County in addition to the money owed the bank.
As of Friday afternoon, the resort owed the county $792,716, Treasurer Kathy DuBois said. The first installment of the taxes was due Jan. 31.
The taxes are due on 29 parcels owed by three entities, DuBois said.
Taxes on one small parcel, owned by Lake Lawn, LLC, have been paid in full, she said. The amount was less than $2,000, she said.
Lake Lawn also owes the city of Delavan about $8,000 in overdue cost-recovery invoices, Treasurer Jennifer Wiese said Friday afternoon.
That does not include current invoices, Wiese said.
The amount due to the city is not mentioned in the complaint.
But similar outstanding payments combined with the outstanding property tax bills earlier this summer pushed Lake Lawn into the limelight against its will.
In June, Lake Lawn and a handful of other businesses had to fight to keep their city of Delavan liquor licenses. City ordinance prohibits the council from licensing businesses with outstanding payments.
The city council June 30 approved the resort's liquor license after Lake Lawn cut a check for $87,200. That covered outstanding cost-recovery invoices as well as some invoices the city had yet to issue.
The cost-recovery invoices are related to attorney fees and other professional services included in the resort's developers agreement with the city.
At the end of June, Lake Lawn was contesting some of the invoices. The resort and city staff worked together to straighten out the payment history.
The summons and complaint filed Wednesday list several defendants, including:
-- Delavan Resort, Delavan Resort Holdings and Delavan Resort Development.
-- Patrick and Wendy Nelson, Mukwonago. Patrick Nelson is the president of Delavan Resort Development. Nelson declined to comment and referred to the prepared statement.
-- Richard A. Schneider, Waukesha.
-- Stephen M. Compton, Williams Bay.
-- John A. Helding, Franksville.
-- Nelson Helding Investments, Nelson Group Investments, R.A. Schneider Ventures, C and M Resort Development, Delavan Resort Hospitality, Delavan Resort Airfield, Delavan Resort Management and Lake Lawn Resort Properties.
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