Today’s planned sheriff’s sale of Conneaut Lake Park was halted Thursday after the nonprofit corporation overseeing the amusement park filed for bankruptcy protection through federal court.
Trustees of Conneaut Lake Park filed for Chapter 11 bankruptcy protection with U.S. District Court in Erie shortly before 4 p.m.
Under federal bankruptcy law, any bankruptcy filing automatically stops any creditors from continuing any action against the Trustees.
Conneaut Lake Park was scheduled to go up for a sheriff’s sale this morning to pay more than $925,000 in overdue real estate taxes dating back to 1997. The federal bankruptcy filing halts the planned sheriff’s for now.
The automatic stay gives Trustees protection from creditors but is subject to oversight of the bankruptcy judge. Any bankruptcy reorganization plan will have to be approved by the bankruptcy court and creditors also will have input on the plan.
No initial court date has been set for the Trustees to appear in federal bankruptcy court in Erie.
“It was the only option we have left to keep the park viable,” Bill Bragg, chairman of Trustees of Conneaut Lake Park, said of the reason for filing for bankruptcy. “We were forced into it.”
On Sept. 10, Conneaut School District, Crawford County and Sadsbury and Summit townships filed a joint motion with Crawford County Court of Common Pleas for a sheriff’s sale to force payment of $927,812.95 in property taxes, interest and penalties owed to them, plus $14,029 in attorneys’ fees as well as costs associated with a sheriff’s sale to be added.
In October, the Pennsylvania Office of Attorney General intervened, filing a petition with Crawford County Court to halt the planned sheriff’s sale of the park. Wednesday, President Judge Anthony J. Vardaro overruled the state’s petition, allowing the sheriff’s sale to go forward until the Trustees filed for federal bankruptcy protection Thursday.
“We’d have loved to avoided acting on this,” said Mark Turner, executive director of Trustees of Conneaut Lake Park. “It’s not the preferred alternative, but from a business standpoint, it’s the right procedure.”
Turner said another alternative was the Trustees resigning en masse, with Conneaut Lake Park then reverting back to control of county court or heading directly to the sheriff’s sale.
Trustee members were concerned walking away would have potential impact on more than just the amusement park if they resigned, Turner said.
“There are more than 100 customers on the park’s water system. What would happen to them?” Turner said if the board had quit. “Also, there is question of access to (private) properties in the park, so there was concern about fire protection and snow plowing of roads.”
Trustees of Conneaut Lake Park had been preparing for a possible bankruptcy filing since late summer when it hired Stonecipher Law Firm of Pittsburgh, a law firm that specializes in business bankruptcy.
“We’ve been preparing for this for awhile,” Turner said. “We didn’t have much reason for optimism.”
Initial documents filed Thursday show Trustees of Conneaut Lake Park Inc. estimates it has between 50 and 99 creditors; assets between $1 million and $10 million; and liabilities between $1 million and $10 million.
“To the best of our knowledge, the assets of Conneaut Lake Park are greater than its liabilities,” Turner said.
“It’s going to be costly,” Turner said of the bankruptcy which could run as much as $250,000 over a five-year period. “We have to get together with the judge, the list of creditors and come up with equitable solutions.”
Trustees also estimate there will be money available to pay its unsecured creditors — those without collateral from the park. The top 20 unsecured debtors are owed more than $347,000, according to initial bankruptcy documents.
Keith Gushard can be reached at 724-6370 or by email at firstname.lastname@example.org.