Jimmy Gierczyk continues to have cash-flow problems.
On Monday, the Lake Erie Land Company (LEL) filed a lawsuit in Porter
Superior Court seeking to foreclose on a loan made to Gierczyk’s Sand Creek
CC Real Estate LLC, the current owner and operator of Sand Creek Country
LEL spokesman Mike Banas told the Chesterton Tribune that the legal
action includes no residential property but only SCCC proper: the 27-hole
golf course, a tennis complex, three outdoor swimming pools, and the
50,000-square foot clubhouse with dining room, banquet facilities, and other
SCCC has over 500 members and Banas emphasized that the LEL has undertaken
the lawsuit with the “hope there will be little or no impact on the
day-to-day or long-term operations of the country club.”
“Everyone’s goal should be to maintain, protect, and, where possible,
enhance the club’s value,” Banas said.
According to the suit, in June 2006 Gierczyk’s Sand Creek CC delivered to
LEL a promissory note in the principal amount of $11.5 million, secured by a
mortgage against the property. As originally executed, the note was
scheduled to mature on June 13, 2009, at which time a lump sum payment for
all outstanding principal and interest was due.
On June 12, 2009, however—the day before the note was set to mature—LEL and
Gierczyk’s Sand Creek CC entered into the first of a series of six
amendments to the note, each of them extending the maturity date by a month.
The final amendment set a drop-dead date of Dec. 31, 2009, which came and
went without Gierczyk’s Sand Creek CC’s making the payment, the lawsuit
LEL took one final crack at getting its money in a letter to Gierczyk’s Sand
Creek CC dated April 28, 2010, in which it demanded full payment. But
nothing doing, and as of Monday, June 14, Gierczyk’s Sand Creek CC owed LEL
the principal of $11.5 million and accrued interest at 12 percent per annum
for the period Jan. 1 through June 14 of $632,500, for a total—excluding
attorney’s fees and costs—of $12,132,500, the lawsuit states.
Interest continues to accrue at the default interest rate of $3,833.33 per
day, the lawsuit notes.
As it happens, for the record, Gierczyk’s Sand Creek CC is also delinquent
in its property taxes, owing in excess of $118,000 due in May 2010 plus
penalties, the lawsuit states.
Among other things, LEL is asking Porter Superior Court Judge Bill Alexa for
a judgment in favor of LEL for the total amount owed, for an order
foreclosing LEL’s mortgage on the Sand Creek Country Club, and for an order
for a sheriff’s sale “empowering LEL to bid for the real estate with the
indebtedness adjudged to be due LEL.”
In addition, LEL is asking Alexa—pending any decision in the case—to appoint
a receiver to manage the operation of the country club and is specifically
recommending Michael Rippey, president of Kitson & Partners Clubs. “He and
his company are experienced in country club management and operations,”
Banas said. “The court will have the final decision and will manage the
relationship with the receiver during the proceedings, not Lake Erie Land.”
A hearing on the appointment of a receiver has been scheduled for 9:30 a.m.
Should ownership of Sand Creek Country Club revert to LEL, following the
court’s decision, “the company would work with club employees and
immediately hire a qualified third-party company with experience in country
club management to assist in the direction of the club’s operation,” Banas
added. “The company would also solicit qualified buyers for the property
along with other real estate assets the company owns.”
“Ultimately, it is our goal to preserve the club’s value under qualified
management capable of maintaining its operations, meeting financial
obligations, and delivering quality services to members,” Banas said.
Gierczyk is the Illinois developer whose LLC, Chesterton Development
Partners (CDP), arrived on the scene in 2006 with the promise of breathing
new life into Coffee Creek Center.
Four years later—in addition to Monday’s foreclosure suit against his Sand
Creek CC—numerous of Gierczyk’s other LLCs, including CDP, have become the
targets of lawsuits.
In May, Old Second National Bank of Chicago Heights, Ill., filed a suit in
Porter Superior Court alleging that CDP LL defaulted in January on an $11.9
million loan secured by 42 acres in Coffee Creek Center and 18 lots in the
Estates of Sand Creek.
Meanwhile, the First Bank and Trust Company of Palatine, Ill., has sued four
of Gierczyk’s other LLCs—established chiefly, it would appear, for
development in New Buffalo, Mich.—alleging that they defaulted on loans
totaling $31.6 million and owed in excess of $22.5 million.
First Bank and Trust company accused Gierczyk as well, in a separate
lawsuit, of transferring assets to his wife with “intent to hinder, delay,
or defraud his creditors.”
Gierczyk’s own legal firm sued him in an attempt to recover more than
$250,000 in legal fees and litigation expenses which it claims Gierczyk
refused to pay.
And Crane’s reported in April that Wheatland Bank of Naperville, Ill., has
filed foreclosure suits on three of Gierczyk’s suburban strip-mall
developments in that state.