Bistro 60 Bankruptcy

Another delay in Bistro foreclosure

A  U.S. Bankruptcy Court judge has approved a 60-day delay in foreclosure proceedings on the property that includes the restaurants, golf cart barn and parking lot. The stay, which would expire on August 19, was requested by the trustee in the Chapter 7 case.

The surprise extension is being questioned by the Trilogy homeowners’ association. The organization filed a motion on Tuesday requesting a hearing on the delay. The HOA’s motion makes the following points:

  • The order “is silent as to any financial arrangements related to the usage of the Property and it is also unclear if the Property is insured or how the property lessee would be obligated for compliance with the associated recorded CCRs and easements under agreements related to the Property.”
  • The association “needs to understand why the Trustee has requested he continue to be the owner of the Property for another two (2) months while an insider entity continues to operate on the estate property without a lease or operating order.”
  • The association “has previously expressed its concerns by the actions taken by CBGM, the defaulted tenant, which have been contrary to the estate’s best interests and, most importantly, the TLQMA homeowners who are most impacted by the property’s operation and maintenance. The Trustee previously stated one of the primary reasons for the leasing of the property to CBGM was in support of offering amenities to the TLQMA homeowners… However, CBGM was unable to operate the restaurant for approximately six (6) months until it was recently reopened, with a new liquor license.”

Liquor license re-issued

The state’s Alcohol Beverage Control agency has re-issued a liquor license for Bar Piatto, one of the companies that has operated in the Bistro 60 property. The license, which was put on hold in 2019 by the state Board of Equalization and later surrendered, was activated on June 9. The license for Bar Piatto was issued to the same parties: Tom Brown and Vence Ventures, an Alaska limited liability corporation.

According to a flier produced under Coral Mountain Golf Club’s name, the Irons Club restaurant is open for drinks between 10 a.m. and 4 p.m. Food is available beginning at 11 a.m.

Bar Piatto filed for Chapter 11 bankruptcy protection in April 2020. The case was converted to Chapter 7 in January 2021. At the request of the trustee, the U.S. Bankruptcy Court judge abandoned the case in March of 2022, releasing the assets to the original owner.

Questions remain on the continued operation of the restaurant. The lease on the building expired after May 31, according to the bankruptcy trustee. Also, Byline Bank, the largest creditor for Bar Piatto and TTBGM, is seeking to foreclose on the property. A hearing is scheduled for June 16, the same day the Irons Club has scheduled a “Summer Kick-Off Party.”

CBGM in breach of lease

The trustee in the Bistro 60 bankruptcy case has notified CBGM is in breach of its lease on the property. According to the trustee’s monthly report: “The operation period was extended to May 31, 2022. CBGM did not tender the May lease payment and the operation period has lapsed. Trustee provided notice of the breach to CBGM.”

CBGM, one of the owners of Coral Mountain Golf Course, has been leasing the Bistro property, using the parking lot, pro shop and cart barn for operation of the course. The breach raises questions about the continued operation of the golf course.

Bistro moves closer to foreclosure

Foreclose of the Bistro 60 property moved a step closer under a ruling issued June 6 by the judge in U.S. Bankruptcy Court. A hearing scheduled for June 16 on Byline Bank’s motion to foreclose on the property has been waived after the deadline to object passed and, according to the court: “No one has filed opposition to the motion.”

The court’s ruling does not grant the bank immediate permission to foreclose. A further motion is required. Parties have another 14 days to respond before the court allows Byline to proceed with foreclosure.

he bank is the largest creditor for the property. Byline loaned TTBGM and Bar Piatto $4.9 million to make improvements to and refinance existing secured debt. The companies ceased making payments in August 2019.

Foreclosure of the Bistro property raises questions about the ability of Coral Mountain Golf Course to continue to operate. The property includes the parking lot and golf cart barn as well as the restaurant.

Critical time in bankruptcy, golf course disputes

(Updated May 27) Several deadlines are approaching in the continuing legal battles over the fate of Coral Mountain Golf Course and the Bistro 60 bankruptcy. Below are key dates:

May 27: Key Golf hearing
A hearing on Key Golf Managements lawsuit against CBGM and other golf course owners is scheduled on this date. See judge’s ruling here.

May 31: Bistro lease expires
CBGM’s lease on the Bistro 60 property expires after this date. The company, which operates Coral Mountain Golf Course, has leased the restaurant property under terms of the Chapter 7 bankruptcy case. While the trustee has the discretion to extend the lease on a monthly basis, there is no record of an extension in the court record as of this writing.

Without a lease extension for use of the property, operation of the golf course is called into question. The Bistro 60 property includes the parking lot and golf cart barn, both of which are necessary for continued operation of the course. CBGM and other owners of the course are required to properly maintain and operate the course under terms of a Superior Court order successfully sought by Trilogy’s HOA.

June 16: Bistro 60 foreclosure hearing
A hearing is scheduled on this date on Byline Bank’s motion to proceed with foreclosure on the Bistro 60 property. The bank is the largest creditor for the property, which includes the restaurants, parking lot and golf cart barn. Byline loaned the companies $4.9 million to make improvements to and refinance existing secured debt. The companies ceased making payments in August 2019.

Last May, the bankruptcy court retained a broker with the authority to sell the property at an initial listing price of $6.5 million. No letters of intent or sale contracts for the property have materialized. The property is now valued at $5.7 million on an “as is” basis and $4.85 million in a forced liquidation.

Byline Bank seeks to claim Bistro property

(Updated May 6) Byline Bank has filed a motion with the bankruptcy court to claim the Bistro 60 property following the trustee’s inability to sell the property. The bank is the largest creditor for the property, which includes the restaurants, parking lot and golf cart barn. A hearing on the motion is scheduled for June 16.

Key points in Byline’s motion:

  • Byline holds a first position deed of trust on the property arising from a commercial loan with TTBGM and Bar Piatto. Byline loaned the companies $4.9 million to make improvements to and refinance existing secured debt. The companies ceased making payments on the loan in August 2019.
  • On May 7, 2021, the bankruptcy court retained a broker the authority to sell the property at an initial listing price of $6.5 million. No letters of intent or sale contracts for the property have since materialized.
  • The property is now valued at $5.7 million on an “as is” basis and $4.85 million in a forced liquidation scenario. The total indebtedness now owed Byline is $6.1 million. “Moreover, $19,750.08 in past due real estate taxes associated with the property remain outstanding and are now a secured lien and Installment #2 2021 taxes totaling $8,209.45 are due April 11, 2022. As such and using the $5,700,000.00 figure, there is, no equity cushion in the property. The amount of any perceived equity cushion is likely an illusory figure … Plainly, Byline’s interest in the property is not adequately protected and, as real estate taxes continue to accrue, justifies immediate relief from the automatic stay…” allowing Byline to assume the property.

(Updated March 27) A U.S. Bankruptcy Court judge has granted a request by the trustee in the Bar Piatto case to abandon the request for Chapter 7 protection. The judge agreed with the trustee that the assets were of inconsequential value or benefit to the estate and its creditor. Bankruptcy law allows a trustee to “abandon” the assets so that the trustee is no longer responsible for it.

The ruling means that the assets of Bar Piatto – some of the furniture, fixtures and equipment of the Bistro 60 restaurant – will be returned to the company, which is still encumbered by a $5.3 million lien by Byline Bank.

The Bar Piatto case is related to the TTBGM bankruptcy of the Bistro 60 restaurant and property, which includes the parking lot and golf cart barn. Abandonment of the Bar Piatto case, however, does not change the Chapter 7 status of TTBGM.

Bar Piatto LLC was formed in 2012, with Vanessa Brown, wife of Tom Brown, listed as its manager. In the bankruptcy case, the company valued its assets at $300,000.

Bar Piatto also held the liquor license for the restaurant. Licensee officers were Tom Brown and Vence Ventures LLC, an Alaskan company owned by Gerald Keller of Rancho Mirage. The license, issued in 2013, was placed on hold by the state of California and subsequently surrendered. According to the trustee’s motion for abandonment, the liquor license was on hold because the company owed the state $172,294 in back sales taxes.

The trustee in the Bar Piatto case earlier summarized his rationale for abandonment:

“The Trustee has attempted to monetize and/or assist in the liquidation of the Assets for the benefit of this Estate’s creditors. Unfortunately, in light of the $5 million Byline Lien, the breach of the Lease by CBGM, the “hold” on the Liquor License by the California Department of Tax and Fee Administration, and the apparent lack of interest by any third-party to purchase the Assets (in conjunction with the purchase of the underlying Trilogy Property), the Trustee believes that the Assets are of inconsequential value and burdensome to the Estate.”

On March 22, Judge Wayne E. Johnson ruled: “For the reasons set forth in the motion, the Court hereby finds that sufficient grounds exist to grant the motion.”

The trustee’s motion for abandonment provided insight into the operations of the two companies”

  • In May of 2021, the trustee negotiated a lease agreement for use of the restaurant equipment and furnishings by CBGM, the company that owns most of the golf course property. The agreement called for CBGM to pay a monthly rent of $1,500. The initial term was retroactive to January 2021 and was to expire at the end of August. “Despite the Trustee and his counsel’s multiple reminders and follow up e-mail correspondences, to date, absolutely no Lease Payments have been made … by CBGM to the Estate. In fact, Mr. Brown has simply stopped responding and his counsel of record … informed the Trustee … that Mr. Brown ‘intended’ to pay the rent, but has been unable to obtain the requisite financing.”
  • “The Trustee was concerned that the Scene LLC and/or Mr. Brown (and his related entities) were using the Liquor License without the Estates’ consent … The Trustee questioned Mr. Brown about the Liquor License … and was informed that Mr. Brown and his related entities were allegedly not using the Liquor License, and that CBGM was negotiating with (the state of California) for a new liquor license for CBGM. But, in an abundance of caution, the Lease expressly provides that CBGM is “. . . prohibited from use of Debtor’s liquor license until further order of the Bankruptcy Court and the removal of the ‘hold’ by (the state).”
  • Key Golf Management expressed interest in taking over operation of the restaurants and golf course, and had contacted the state about qualifying for the liquor license. “Unfortunately, it appears that Key Golf is no longer interested in taking over management of the golf course, the property, and the restaurant.”
  • The TTBGM trustee has been actively marketing the Trilogy Property for sale “… for approximately a year, and to date, the TTBGM Trustee has not received any offers.”

Trustee seeks extension of lease to CBGM

(Updated February 4, 2022) CBGM, one of the companies that owns Coral Mountain Golf Course, would continue to lease the Bistro 60 property and restaurants until May 31 under a motion filed by the trustee in the Chapter 7 bankruptcy. The company would pay $30,000 per month for the temporary lease, a $7,000 increase from the current lease.

The motion, which must be approved by the bankruptcy judge, was filed on Feb. 3.

The trustee argues that the temporary lease is in the best interests of the estate, creditors and Trilogy homeowners:

  • “Allowing CBGM to continue to lease the Trilogy Property does not harm the Estate. Rather, the lease of the Trilogy Property will substantially benefit the Estate and its creditors in that through lease of the Trilogy Property, the Estate will receive income of $30,000.00 per month.”
  • “Based on the Trustee’s experience in the liquidation of bankruptcy estates, occupied rental property will appeal to potential buyers and maintain a higher sale value over non-income producing vacant property. This remains true even if a buyer intends to occupy rather than rent out the property as occupation ensures that the property is maintained and safeguarded.”
  • “The Commercial Lease allows CBGM to operate the restaurant and, more importantly, the adjacent golf course, Coral Mountain Golf Club (“Golf Club”), which is beneficial to the surrounding homeowners and members of the Golf Club. The Trustee does not have any other options which will provide income for the Estate and not result in a non-income-producing vacant property.”

The trustee continues to market the restaurant property for $5.99 million. The restaurant has operated sporadically. Its liquor license was suspended and then surrendered in November 2021.

CBGM, which is owned by Richard Cushman and Tom & Vanessa Brown is currently involved in several court cases. Among them:

  • A lawsuit and countersuit in Orange County between Cushman and Brown over ownership of the company.
  • A lawsuit filed by Cushman against CBGM seeking to foreclose the golf course property to satisfy unpaid debts to Cushman’s family trust.
  • A lawsuit filed by Key Golf in which the Nevada company is seeking to foreclose on the golf course property to satisfy unpaid debts.
  • CBGM filed a lawsuit against the former president of Trilogy’s homeowner association and its attorney claiming professional negligence and misrepresentation in negotiations about an agreement to share costs of improving landscaping between the course and homeowner properties. A related dispute, between CBGM and the HOA, is in binding arbitration.
  • The Trilogy HOA obtained a temporary court injunction requiring CBGM and other golf course owners to properly maintain the course.

CBGM operating restaurants

(Updated December 23) The trustee in the Chapter 7 bankruptcy case is allowing CBGM to continue to operate the restaurants through January. Also, the hearing on TLQMA’s motion to question the lease extension has been rescheduled to January 25 from December 28. This is the trustee’s report:

“Since the last hearing on November 30, 2021, the Trustee has received reimbursement for
an NSF payment for October in the amount of $29,500.00 from CBGM. The Trustee believes that
the November and December payments are forthcoming and has requested those payments be made
prior to the upcoming hearing. The Trustee has been advised that Precision Club Management, LLC, a division of Pro Turf International, Inc. will no longer be providing maintenance services for the Golf Club and is no longer interested in being a third party operator for the Golf Club. At the upcoming hearing, the Trustee will either request a short continuance or will withdraw the Motion.”

Bistro price discounted again

(Updated December 4) The restaurant, originally for sale at $6.5 million, now has a sales price of $5,995,000, according to the real estate listing. It was repriced in October at $6.25 million.

Liquor license surrendered

The state liquor license for the restaurants at Coral Mountain Golf Course was surrendered on November 18. The action appears to be a necessary step in a transfer of the license to Precision Club Management, which has an agreement to temporarily operate the golf course and is seeking approval to also manage the Irons Club and Scene at Bistro 60.

According to state ABC rules: “Every licensee who surrenders, abandons or quits his licensed premises, or who closes his licensed business for a period exceeding 15 consecutive calendar days, shall, within 15 days after closing, surrendering, quitting, or abandoning his licensed premises, surrender his license or licenses to the department… Any license voluntarily surrendered under… this rule shall be revoked if it is not transferred to another person or for use at another premises, or redelivered and the licensed activity resumed, within one year from the date of such surrender.”

Judge OKs sale of Brown’s house

(Updated Nov. 20) The Griffin Ranch house owned by Tom Brown was sold for for $1.4 million as part of the Chapter 7 bankruptcy case involving Brown’s company, TTBGM. Under the court order, “the Trustee is authorized to pay the liens, costs of sale, escrow fees and other expenses directly from the sale proceeds at the close of escrow including, but not limited to: (a) all real estate taxes owed to the Riverside County Tax Collector, (b) the first deed of trust in favor of PS Funding, Inc., Instrument No. 2017-0481037 (“PS Funding Lien”), (c) the second deed of trust in favor of Byline Bank, Instrument No. 2017-0546748 (“Byline Lien”) and (d) real estate commissions in the total amount of six percent of the purchase price of the Property to be split in the manner agreed to by the parties.”

Bistro lease payment NSF

(Updated Nov. 17) The trustee in the Bistro 60 bankruptcy case reports that the check issued by CBGM for the October lease of the restaurant was returned by the bank for insufficient funds. The check was in the amount of $29,500.

Hearing on lease extension continued;

(Updated December 3) The Trilogy homeowner’s association asked for and will receive a hearing on a proposal by the trustee in the Bistro 60 bankruptcy case to extend CBGM’s lease to operate the restaurant until February 28, 2022. The current lease expired at the end of October under the Chapter 7 proceedings. The hearing on the HOA motion was held on November 30 and continued to December 28.

Additionally, in a motion filed Nov. 9 in the related Bar Piatto Chapter 7 bankruptcy case, the HOA states:

  • “TLQMA understands the Trustee and TTBGM are working to facilitate a sale of the Property and the adjacent, related lots collectively to a single buyer. To be clear, TLQMA remains supportive of these efforts and has previously indicated a willingness to work with the TTGBM Trustee in resolving ongoing issues if doing so results in new third-party owners of the entire complex. TLQMA’s position remains unchanged in this regard. Any short-term contractual agreement to lease or operate the property by a third party likely does not result in new third-party owners of the entire complex nor is it likely to be in the best interests of the 1,238 homeowners. However, to be crystal clear and to have TLQMA’s support, any new third-party owner cannot be in any way connected directly or indirectly with Mr. Brown.”
  • “TLQMA has recently been advised via electronic communication by the alleged secured lender, Richard Cushman, that Mr. Cushman is owed over $7 million on those lots in a loan long in default and Mr. Cushman is poised to foreclose on CBGM / Mr. Brown.”

The motion by the HOA claims that CBGM has failed to operate the restaurant and has taken recent actions as owner of Coral Mountain Golf Club to damage the value of the restaurant. The 37-page motion was filed with the court on October 22. The key elements follow:

“While TLQMA remains fully supportive to the idea of the Trustee leasing the Property to a capable restaurant and golf course operator, it is concerned by the actions taken by CBGM, the proposed tenant, which have been contrary to the estate’s best interests. TLQMA has communicated to the Trustee a willingness to work cooperatively towards obtaining a capable, responsible, and financially solvent third-party operator of the entire property, including the associated golf course, operated under the name the Coral Mountain Golf Club (“Golf Course”).”

“CBGM has flouted the governing covenants, conditions and restrictions that require it to maintain the Golf Course, and surrounding areas in proper condition. Additionally, notwithstanding an earlier lease with the Trustee that is effective through the end of the month, CBGM is not operating the restaurant, which has been closed down for an extended period of time. CBGM also appears to be in violation of an injunction issued by the Riverside County Superior Court against CBGM and others that forbid CBGM to fail to maintain the Golf Course or take any actions that would interfere with its normal operations. TLQMA has sought assurances from CBGM and others of their intention to cure such deficiencies but as of October 21, 2021, CBGM has failed to respond and will almost assuredly force TLQMA to seek Court ordered remedies to ensure the injunction is honored and enforced.”

“TLQMA files this response to bring to the attention of the Trustee and Court these developments, as they likely will have a bearing on whether the Trustee wishes to pursue the Lease and whether the Court believes the Lease with CBGM is in the best interests of the estate.”

TLQMA on October 22 released the full document to Trilogy homeowners via email. A link to the court document can be found here.

Trustee to extend lease operations

(Updated October 8) The trustee in the TTBGM bankruptcy case has filed a motion to extend the temporary lease to allow the principal owner of the golf course to operate the restaurant until February 28, 2022. The current lease was set to expire at the end of October under the Chapter 7 proceedings.

The trustee’s motion, which requires approval by a bankruptcy court judge, states that the extension protects both creditors and the Trilogy community:

“(The lease extension) will avoid the need to force CBGM to shut down the restaurant and the Golf Club, to the detriment of the 1,200 homeowners residing around the adjacent golf course, many of whom are members of the Golf Club. Granting the Trustee the authority to continue to operate by leasing the Trilogy Property to CBGM prevents the imposition of extreme difficulties upon these innocent third-parties, some of whom have paid for lifetime Golf Club memberships. Therefore, continued operation of the Trilogy Property and the Trustee’s ability to collect rents will thus allow the Trustee to preserve and even enhance its value by generating funds, while also preventing harm to innocent third party homeowners and/or members.”

The trustee collects $23,000 in monthly lease payments from CBGM. The proceeds are placed in a reserve account that will eventually be allocated among creditors.

The trustee’s motion did not reveal any information on the efforts to secure a buyer for the restaurant property, which also includes the parking lot and golf cart barn. The trustee said he “continues to explore options for a resolution of the Estate’s interest in the Trilogy Property with CBGM.”

The trustee did warn that the lease extension is temporary.

“The Trustee is not requesting or anticipating to operate the Trilogy Property indefinitely. Rather, Trustee would like to ensure the Trilogy Property is occupied while he continues to try to negotiate a resolution with CBGM and/or other related parties based on the claims filed and continues to actively market the Trilogy Property as an income-producing property.”

Residents lose appeal claiming to be creditors

(Updated September 24) The judge in the Bistro 60 bankruptcy has rejected appeals by three Trilogy residents that they are secured creditors in the Chapter 7 case. The ruling upholds the decision of the trustee that the homeowners did not have standing in the case and are not entitled to claims against the debtor, TTBGM.

The following claims were disallowed in their entirety:

  • Steve Cornaglia in the amount of $1,663,872.
  • Pat and Pamela Courtney in the amount of $1,344.
  • Richard Besone in the amount of $1,663,872.

Cornaglia and his attorney, Besone, each filed claims in January in the amount of $1,663,872 on behalf of Trilogy homeowners. The money represents the $28 in additional dues paid to the Trilogy HOA as part of the perimeter landscape agreement between the HOA and the owners of the golf course.

The trustee successfully argued that Cornaglia and Besone do not have “standing to assert a claim against the Estate on behalf of the 1,238 homeowners” and they provided no evidence that they have a “security interest in the Trilogy Property and thus are entitled to assert a secured claim.” The trustee wrote that “while the Restated Declaration was recorded against the Trilogy Property, the Restated Declaration simply runs with the land and does not create a security interest in the Trilogy Property for the benefit of the Trilogy HOA or the homeowners.”

Brown & CBGM obtain loan

(Corrected August 2) Tom Brown and CBGM on July 12 obtained a loan in the amount of $125,000 on the property that holds hole #1 and the driving range. The loan was obtained from LTR Holdings LLC. Information on that company is lacking at this time.

Bistro lease to be extended to October 31

(Updated July 15) The trustee in the Bistro 60 Chapter 7 bankruptcy case is seeking court approval to extend the temporary lease agreement for CBGM to continue to operate the restaurant to October 31. The amended agreement also would increase the monthly lease from $13,000 to $23,000. Those monies are deposited into an account for the estate to eventually be paid to creditors.

CBGM currently owns and operates Coral Mountain Golf Course. Under a lease agreement, it also is operating the restaurant.

According to the filing on July 13: “The Lease Agreement and Amendment allows CBGM to operate the restaurant and the adjacent golf course, Coral Mountain Golf Club … which is beneficial to the surrounding homeowners and members of the Golf Club. The Trustee does not have any other options which will provide income for the Estate and not result in a non-income producing vacant property.”

In the filing, the trustee states: “Based on the Trustee’s experience in the liquidation of bankruptcy estates, occupied rental property will appeal to potential buyers and maintain a higher sale value over non- income producing vacant property. This remains true even if a buyer intends to occupy rather than rent out the property as occupation ensures that the property is maintained and safeguarded.”

The restaurant and surrounding property has been on the market since May. While the filing does not state this, it appears no acceptable offer has been made as of this writing. 

Bistro 60 listed for sale

Restaurant and surrounding land are now advertised for sale:

“Rare opportunity to own and operate an upscale restaurant sitting on a prestigious La Quinta golf course. The property was remodeled and upgraded significantly in 2019 accentuating the indoor/outdoor dining experience. Coral Mountain Golf Club and mountain views make this a destination location for many in the golfing and restaurant community. The Restaurant/Bar opportunity sits at the entryway of the prestigious 18-hole championship Southern California golf course designed by Gary Pranks. Seller is a United States Bankruptcy Trustee. All sales are subject to the rules and regulations of the United States Bankruptcy Court and must be approved by same. Property being sold in “AS IS” without warranties of any kind, expressed or implied, being given by the Seller.”

Link to listing can be found here.

Sale of Brown’s home authorized

The trustee in the Chapter 7 bankruptcy case of TTBGM has authorized the sale of the Griffin Ranch home of Tom & Vanessa Brown, owners of the company that operates Bistro 60. The notice was filed on April 29.

Under the agreement with the Browns, the trustee has authorized Winterstone Real Estate to begin the sales process immediately. The broker believes the listing price should be $1.295 million. The Browns will be allowed to occupy the home until the sale. No mention was made of when the restraurant property will be listed for sale.

The document filed on April 29 also revealed:

  • The property will sold to either a “non-insider third party or by selling the Estate’s equity (in the Griffin Ranch property) to the Browns and/or CBGM, LLC.”
  • TTBGM listed a secured lien on the Griffin Ranch property to Peer Street (a real estate investing company) in the amount of $1 million. “The Trustee is informed and believes that Byline Bank has a second deed of trust against the (Griffin Ranch property) in the amount of $5,668,139.67.” According to the footnote: “This lien is cross-collateralized with Byline Bank’s first deed of trust against the Debtor’s property” at Bistro 60 on Trilogy Parkway.

Bistro to be listed for $6.5 million

Bistro 60 and its accompanying property will be listed for $6.5 million under a Chapter 7 bankruptcy sale, according to a motion filed April 9 by the trustee. The listed price is considerably below the $10 million value estimated by the debtor, TTBGM Inc.

The Bistro property owned by TTBGM includes the 6,000 square foot restaurant, the 3,000 square foot golf cart barn, the parking lot and the roadway leading to the Bistro. It is a single tax parcel of 3.9 acres.

The trustee is hiring Brian Thompson of Winterstone Real Estate to market and sell the property. Byline Bank, the principal secured creditor, has informed the trustee that it prefers that the property be marketed and sold. The trustee “is in agreement and has determined that it is in the best interest of all creditors, secured and unsecured, that each of the properties be marketed and sold.” Byline Bank has a secured lien in the amount of $5.3 million.

The bankruptcy sale also will include the Griffin Ranch home of Tom and Vanessa Brown, the owners of TTBGM. The proposed listing price for the Home is $1.3 million. The proceeds from that sale will be added to the Bistro proceeds as part of the bankruptcy settlement.

If the properties are sold for the listing prices, the total of $7.8 million will be be below the total of claims against the two properties. The court’s claims register indicates that there have been 17 claims filed totaling $10.3 million. Of that total:

  • Secured claims amount to $8.6 million;
  • Priority claims $141,604;
  • Chapter 11 administrative claims of $1,776; and
  • General unsecured claims of $1.6 million.

The trustee states that: “With this value, even taking into account the lender lien, the tax liens and costs of a sale, the Trustee asserts there is sufficient equity in the Trilogy Property for the benefit of the Estate and to provide a meaningful distribution to unsecured claims.”

Wintersone will assume all marketing costs for the bankruptcy sale. According to the proposed agreement, “the total commission will not exceed four percent (4%) or six percent (6%) of the total purchase price” of the properties.

In a case related to the Bistro 60 bankruptcy, the trustee has engaged legal counsel to: “(1) investigate and liquidate the Estate’s interest, if any, in the Debtor’s scheduled real property and any other assets, including whether Estate property is being used by the Debtor’s insiders via a new entity; (2) negotiate for the turnover and disbursement of Estate property accordance with the Bankruptcy Code; (3) to advise the Trustee regarding any interest of Debtor in the Estate property and/or other undisclosed assets or avoidance actions; (4) assist the Trustee in all other aspects for the smooth administration of this bankruptcy case.”

Bar Piatto is the LLC operating the restaurant and bar additions to Bistro 60.

Negotiations falter; sale to be pursued

Byline Bank, the largest secured creditor in the Chapter 7 bankruptcy of the owners of Bistro 60, has rejected a settlement with CBGM, according to court documents filed Tuesday. As a result, the bankruptcy trustee intends to proceed with the sale of the property while negotiations continue.

The trustee also proposes to extend its lease to CBGM to operate the restaurant until July 31. The lease was set to expire at the end of March.

Here are the key passages from the court filing:

  • “The Trustee has been in discussions with CBGM (for which the principals of the Debtor are members along with Richard Cushman, who is alleged to be the largest creditor of the Debtor) regarding a resolution of the Estate’s interest in the Trilogy Property and the real property located at 81094 Monarchos Circle, La Quinta, California (“Monarchos Property”). However, the resolution was largely contingent on a reinstatement/resolution of the Byline Lien. The Trustee was informed by Byline Bank on March 10, 2021 that it has rejected CBGM’s last proposal…. Based on my investigation into the assets of the Estate, I believe that after deducting the Byline Lien and hypothetical costs of a sale, the Trilogy Property may have significant equity to administer for the benefit of the Estate and its creditors. I have been in discussions with CBGM (for which the principals of the Debtor are members along with Richard Cushman, who is alleged to be the largest creditor of the Debtor) regarding a resolution of the Estate’s interest in the Trilogy Property and the real property located at 81094 Monarchos Circle, La Quinta, California (“Monarchos Property”). However, the resolution was largely contingent on a reinstatement/resolution of the Byline Lien. I was informed by Byline Bank on March 10, 2021 that it has rejected CBGM’s latest proposal.”
  • “While the Trustee will continue to explore options for a resolution of the Estate’s interest in the Trilogy Property and the Monarchos Property, the Trustee intends to file an application to employ a broker shortly such that he can proceed with the marketing and sale of the Trilogy Property and the Monarchos Property.”
  • “Pursuant to the Lease Agreement, the lease term began on November 1, 2020 and terminated on March 31, 2021, but could continue month to month thereafter at the discretion of the Trustee. The Trustee, at his discretion and based on his business judgment, has determined that the Lease Agreement should continue month to month, for three (3) additional months to June 30, 2021.”
  • “The Operating Period is sufficient to allow the Trustee to collect the Lease Payments while he continues to try to negotiate a resolution with CBGM based on the claims filed and begins to market the Trilogy Property as an income producing property. “

Accounting firm to review financial records

The trustee in the Chapter 7 bankruptcy case of TTBGM has hired an accounting firm to review the company’s financial records. The move to hire Hahn Fife & Company will help finalize the bankruptcy proceeding prior to liquidation of its assets, including Bistro 60. The trustee, creditors and the trustee’s legal counsel have repeatedly expressed concerns about the accuracy of various financial reports of TTBGM.

The accounting for will examine TTBGM’s “books and records, forensic accounting, analysis of potential preference actions, reviewing financial documents, and preparation of any required tax returns.”

A final hearing of creditors is scheduled for February 23.

Final bankruptcy hearing scheduled

The lengthy bankruptcy proceeding for TTBGM, Inc. is expected to come to a close on Feb. 23, the date the trustee has set for a final hearing of creditors. Once the Chapter 7 filing is approved by a judge, the trustee will be authorized to liquidate the company’s nonexempt assets and use the proceeds to pay creditors.

TTBGM owns the Bistro 60 restaurant and the land it occupies, including the parking lot used for the restaurant and golf course. The golf course property is owned by CBGM, LLC. That company also operates and maintains the course under a temporary lease negotiated by the trustee.

Prior to the final hearing, the trustee directed TTBGM owner Tom Brown to finalize the myriad of financial records, operating agreements, and schedules of assets and liabilities with the bankruptcy court’s attorney. Many questions remain, as evidenced by a 90-minutes creditors’ hearing held on January 5. Brown was quizzed about the relationship between TTBGM and CBGM, including terms of loan agreements with Richard Cushman and several bank account transfers.

Rika Kido, the trustee’s attorney who specializes in bankruptcies, at one point said: “Frankly, the finances are not making any sense. How was (TTBGM) ever going to be profitable under this structure? … This entire business model makes no sense to me.”

Trustee approves plan; Brown files as creditor

The U.S. Bankruptcy Court has approved the trustee’s plan to lease operations of Bistro 60 and the golf course to CBGM, the company that owns the golf course property in Trilogy. No creditor opposed the plan. 

Under terms of the agreement:

  • CBGM will pay the trustee $10,000 per month, which will be deposited in an escrow account to be disbursed to creditors “only upon further Court order or at the end of this case.”
  • CBGM will be required to pay utilities, taxes, insurance, assessments and other services.
  • CBGM may only use the property for normal business purposes. The company is prohibited from subleasing any space for any activity that may result in business competition.
  • The lease term is until March 31, 2021 and will continue month to month at the discretion of the trustee.

Documents filed this week in the Chapter 7 bankruptcy of TTBGM — the company that owned the bistro and operated the golf course for CBGM — also include an amended list of creditors and amended financial statements. Among the information released:

Amended list of creditors:
Secured creditors are Byline Bank for $5.3 million and Peer Street for $1 million.
Priority unsecured creditors are the California Tax & Fee Administration for $5,000; the IRS for $128,000; the trustee for $975; and the California Employment Department for an unknown amount.
Creditors with unsecured claims are CBGM for $4.6 million; Richard Cushman for $4 million; Tom Brown for $759,890 for a loan; Statewide Services for $300,000; Coachella Valley Water District for $40,000; Imperial Irrigation District for $16,000; Wells Fargo for $1,960; and Key Golf and William Scottsman Inc. for unknown amounts.

Total claims:
Real and personal property assets:
Cash & cash equivalents: $400
Deposits & prepayments: $738,214
Accounts receivable: $972,079
Office furniture & fixtures: $249,478
Vehicles: $57,000
Real property: $11,445,000

Summary of Assets & Liabilities:
Total assets: $13,462,171
Total liabilities: #16,135,322

TTBGM statement of financial affairs:
Current year revenue (Jan. 1 to April 27): $524,626
2019 annual revenue: $1.922,547
2018 annual revenue: $2,325,823

New golf carts ordered

(Updated Dec. 7)
In a letter to charter members, CBGM, the owner and operator of the golf course, states that it has ordered 80 new golf carts with lithium batteries and GPS capability. The new carts are expected to arrive in January. The letter from General Manager Jim Wanless also states that the company has also leased new maintenance equipment for the course.

Trustee proposes to lease restaurant
and course operations to CBGM

The trustee in the Chapter 7 bankruptcy case involving Bistro 60 is seeking a judge’s approval to lease the restaurant, parking lot and golf course barn to CBGM, the company that owns the golf course at Trilogy.

The motion, which the trustee admits is “outside the ordinary course” of administration of a Chapter 7 property, “is in the best interest of the estate and its creditors.”

Creditors and the debtor, TTBGM, have 14 days to file objects to the trustee’s motion. In essence, the bankruptcy trustee will serve as landlord for the property.

Under terms of the lease:

  • CBGM will pay the trustee $10,000 per month, which will be deposited in an escrow account to be disbursed to creditors “only upon further Court order or at the end of this case.”
  • CBGM will be required to pay utilities, taxes, insurance, assessments and other services.
  • CBGM may only use the property for normal business purposes. The company is prohibited from subleasing any space for any activity that may result in business competition.
  • The lease term is until March 31, 2021 and will continue month to month at the discretion of the trustee.

The trustee states that, based on his experience in the liquidation of bankruptcy estates, “occupied rental property will appeal to potential buyers and maintain a higher sale value over non-income producing vacant property.”

The trustee further states that allowing CBGM to operate the restaurant and adjacent golf course “is beneficial to the surrounding homeowners and members of the Golf Club.” The trustee’s motion further states:

  • “The Lease Term is sufficient to allow the Trustee to collect the Lease Payments until the Claims Bar Date has passed, try to negotiate a resolution with CBGM based on the claims filed, and if the Trustee is unable to reach a resolution, allow the Trustee to begin to market the Trilogy Property as an income producing property.”
  • “With respect to the second factor, an operating order will avoid the need to force CBGM, Inc. to shut down the restaurant and the Golf Club, to the detriment of the 1,200 homeowners residing around the adjacent golf course, many of whom are members of the Golf Club. Granting the Trustee the authority to operate by leasing the Trilogy Property to CBGM prevents the imposition of extreme difficulties upon these innocent third-parties, some of whom have paid for lifetime Golf Club memberships.”
  • “Therefore, continued operation of the Trilogy Property and the Trustee’s ability to collect rents will thus allow the Trustee to preserve and even enhance its value by generating funds, while also preventing harm to innocent third party homeowners and/or members.”

The motion requires the approval of the U.S. Bankruptcy Court judge, which can only come after the 14-day period in which creditors can respond.

The notice was filed with the court on November 24 and was signed by the trustee, Arturo Cisneros, and Tom Brown, who signed on behalf of CBGM. In earlier court proceedings, Brown testified that he and his wife are part owners of CBGM, along with majority owner Richard Cushman.

It is not clear how this action affects repossession of golf course equipment, including carts and mowers (see blow).

Vendors get OK to repossess
leased equipment at course

(Updated Nov. 19)
A U.S. Bankruptcy Court judge has issued orders allowing two companies to repossess leased equipment at Coral Mountain Golf Course. The equipment includes golf carts and landscaping gear. The orders from the judge apply to the following creditors:

* PNC Equipment Finance, which leased to TTBGM 81 golf carts with GPS units, one beverage cart, and five haulers. PNC claims that Tom Brown’s company has not made payments on the equipment and failed to provide proof of insurance as required under the lease.
* TCF Equipment Finance, which leased to TTBGM vehicles to maintain the golf course, including: one Toro ProCore 648 aerator, two Toro Reelmaster 5510-D mowers, two Toro Workman GTX Gas tractors, one Toro ProForce Debris Blower, one Toro Greens Pro 1260 greens roller and one Toro Greenmaster 3420 Triflex Hybrid greens mower.

Under the order, each company “…may enforce its remedies to repossess or otherwise obtain possession and dispose of the Property in accordance with applicable nonbankruptcy law … The 14-day stay provided by FRBP 4001(a)(3) is waived.”

Latest hearing sheds little light

Little new information was forthcoming during a two-hour meeting for creditors in the Chapter 7 bankruptcy case of TTBGM held on November 13. Most of the time was spent rehashing old information and hearing Tom Brown’s list of problems regarding running a golf course and remodeling Bistro 60.

Here are the few highlights:

  • CBGM, the company that owns the golf course property, is also operating and maintaining the course. TTBGM is no longer involved.
  • Brown testified that he has been attempting to renegotiate the leases for golf course equipment — 81 golf carts with GPS units, one beverage cart, and five haulers — on behalf of CBGM to forestall repossession.
  • Financial statements for TTBGM are still being corrected.
  • Written agreements between TTBGM and CBGM are still being requested by parties.
  • Brown testified that TTBGM has received no revenue since it initially filed for Chapter 11 bankruptcy protection in April. CBGM received all golf course revenues during that period.
  • Brown testified that the revised CCRs regarding the golf course between the Trilogy Homeowners’ Association are invalid because exhibits were not recorded. This is the subject of arbitration between the parties.
  • Brown testified that TTBGM has no other assets beyond the restaurant and parking lot property and his house in Griffin Ranch.
  • PNC Equipment Finance, which leased to TTBGM 81 golf carts with GPS units, one beverage cart, and five haulers.
  • TCF Equipment Finance, which leased to TTBGM vehicles to maintain the golf course, including: one Toro ProCore 648 aerator, two Toro Reelmaster 5510-D mowers, two Toro Workman GTX Gas tractors, one Toro ProForce Debris Blower, one Toro Greens Pro 1260 greens roller and one Toro Greenmaster 3420 Triflex Hybrid greens mower.

Trustee hires attorney to assist in case

(Updated November 3, 2020)
The first creditors’ hearing for the Chapter 7 bankruptcy of TTBGM, Inc., revealed little new information. Because of a crowded schedule for the U.S. Bankruptcy Court trustee, the hearing on November 3 was brief and was continued to November 13.

Key developments from the hearing include:

  • Tom Brown testified that he and his wife Vanessa are the only two shareholders in TTBGM, the company that owns and operates Bistro 60 and manages, but does not own, the golf course. Brown states that Vanessa’s share is 85 percent to his 15 percent. (In an earlier hearing, Brown testified that he and his wife own 50 percent of CBGM, LLC, the company that owns the golf course property).
  • Brown and his attorney said they would file within the next seven to ten days amended financial documents. Many of the documents that were filed in the earlier Chapter 11 bankruptcy case were incorrect, including tax forms, business operating records and financial disclosure statements.
  • In response to a question, Brown testified that he invested “about $250,000” in the golf course.

Prior to the hearing, the trustee hired a law firm to assist him in the case. According to the filing: “… it appears that the Debtor’s principal and sole shareholder, Tom Brown, has been involved in disputes with various parties over the management and leasing of the golf course and the other restaurant entities that operate on the Trilogy Property. The Trustee needs immediate assistance to determine whether there are valid lease(s) for the premises located on the Trilogy Property and/or whether it is in the Estate’s interest to enter into short term leases with the entities which operate on the Trilogy Property.”

The trustee’s filing further states:

  • On its Schedule G, the Debtor did not list an interest in any leases or executory contracts. However, upon his initial investigation, the Trustee has learned that the Debtor may be a party to numerous leases for various types of maintenance equipment used in golf course operations, including leases for haulers and eighty-one golf carts and GPS units. Additionally, the Trustee has been informed that the Debtor may be a party to a lease with Bar Piatto, LLC, which filed a Chapter 11 bankruptcy on April 27, 2020, Case No. 6:20-bk-13006-WJ, for the restaurant located at the Trilogy Property. None of the foregoing was listed on the Debtor’s Schedules.
  • The Trustee also needs to investigate the Debtor’s financial affairs to determine the nature and extent of any preferential, fraudulent, unauthorized post-petition or other avoidable transfers of the Debtor’s assets prior to and/or after the Petition Date. The Trustee needs to investigate and evaluate voidable or improper payments and/or transfers made, if any, to any persons or business entities that the Debtor may be associated with, or to insiders of the Debtor during the years prior to the Petition Date.
  • The Estate may have causes of action against insiders and/or current or former officers, directors, or employees of the Debtor and/or third parties to be pursued in this case (collectively, the “Insider Claims”). The possible legal theories to be pursued may include breach of fiduciary duties, fraud, misappropriation of funds, fraudulent transfers, conversion, and breach of contract, among others. The Trustee will need assistance in the investigation and evaluation of the Insider Claims related to events occurring prior to the Petition Date, and if appropriate, the pursuit of such Insider Claims.

Creditors have until Jan. 19 to file claims

The trustee appointed to the Chapter 7 bankruptcy of Tom Brown’s TTBGM company has filed notice that creditors have until Jan. 19 to files claims. Creditors that previously have filed claims against the company need not file again, the trustee states. The trustee states that “suffiecient assets may become available for a distribution of creditors.”

Court delays repossessions

(Updated Oct. 4)
Hearings on motions by creditors to repossess leased equipment for the golf course have been postponed by the U.S. Bankruptcy Court until Nov. 19 to allow the court to appoint a new trustee to oversee the liquidation of assets for Tom Brown’s company, TTBGM. Hearings were originally for October. The postponement allows TTBGM to continue to use the equipment until the court liquidates the estate.

The rulings apply to the following creditors:
* PNC Equipment Finance, which leased to TTBGM 81 golf carts with GPS units, one beverage cart, and five haulers. PNC claims that Tom Brown’s company has not made payments on the equipment and failed to provide proof of insurance as required under the lease. PNC claims that TTBGM has not made payments since November 2019 and is $75,930 in arrears. Total amount owed is $353,288.
* TCF Equipment Finance, which leased to TTBGM vehicles to maintain the golf course, including: one Toro ProCore 648 aerator, two Toro Reelmaster 5510-D mowers, two Toro Workman GTX Gas tractors, one Toro ProForce Debris Blower, one Toro Greens Pro 1260 greens roller and one Toro Greenmaster 3420 Triflex Hybrid greens mower. TCF claims that no payments on the equipment lease have been made since the end of January and that the company is owed $192,096. The amount of debt owed is $192,095.86. Fair market value of equipment is $105,500.

Bankruptcy converted to Chapter 7

(Updated Oct. 2)

Tom Brown’s effort to reorganized Bistro 60 financial operations under Chapter 11 bankruptcy protection was quashed when the judge for the U.S. Bankruptcy Court ordered that the case be converted to Chapter 7. The conversion sets in motion a process to liquidate the assets of Brown’s company TTBGM. The judge’s order also cancelled the October 6 hearing scheduled to argue the conversion.

TTBGM owns and operates Bistro 60, including the building and parking lot. The company also maintains the golf course, which is owned by another company, CBGM.

The judge agreed with the trustee assigned to the case that:

  • The Debtor is either not producing income or not reporting income.
  • Lease agreements and any revenue received under the agreements are not disclosed in the schedules.
  • The monthly operating reports reflect no revenue or earnings.
  • The monthly operating reports also do not reflect the deposit of income from the parking structure, the remaining facilities on the commercial property, or the rental property.
  • The “Debtor did not earn any income in the twelve months prior to the filing” of the bankruptcy case.”
  • The “Statement of Financial Affairs reflects no gross revenue of any kind in 2018 and 2019.”
  • The Debtor engaged in “intercompany transactions with related Chapter 11 Debtor Bar Piatto LLC; and
  • Debtor engaged in a series of undisclosed insider transactions.

The judge’s ruling further stated:

The (trustee) has described extensive misconduct by the Debtor in the Motion and the pleading filed by the Debtor does not controvert any of the allegations. Instead, the Debtor asks that the Court dismiss the case (not convert it) because the Debtor hopes to obtain funding to pay one secured creditor.

In its reply brief, the OUST notes that its Motion “detailed evidence of ‘cause’ including diminution of the estate and the Debtor’s inability to confirm a plan, the Debtor’s failure to disclose monies owed by insiders in the schedules, the submission of inaccurate monthly operating reports, and the preferential treatment granted to insiders” but the Debtor, in response, “fails to contest this evidence or offer any justification for the omissions in the schedules and monthly operating reports.”

The (trustee) also pointed out that even if the Debtor could hypothetically obtain funding, “a loan repaying one secured creditor does not establish
feasibility.” The (trustee) also points out that while the Debtor indicated it would file amended documents fixing certain reporting problems within five days, it never did so.

Finally, the (trustee) argues that any loan proposal that favors the Debtor and an insider “may harm all other creditors” and, therefore, a “Chapter 7 framework will allow a disinterested trustee to review the Debtor’s financial records and ascertain whether assets may be recovered for the benefit of creditors.”14 The (trustee) concludes that “conversion is in the best interests of the estate.”

The Court entirely agrees with the articulate and well-reasoned arguments of the (trustee) and shall enter an appropriate order converting the case.

An initial hearing of creditors is scheduled for November 3.

What happens in Chapter 7

The bankruptcy court will appoint an unbiased trustee to oversee the entire bankruptcy process. They will review the assets of TTBGM and determine which assets can be liquidated to pay creditors. The trustee then schedules meetings with the creditors, where the validity of the petition and finances is confirmed.

The bankruptcy trustee reviews the personal assets and finances of the debtor. Exempt property—or property necessary to maintain basic standards of living—is retained by the debtor. Nonexempt property is seized and liquidated to pay creditors. However, in many cases debtors are allowed to keep their primary home, personal possessions, and car. The trustee then oversees the liquidation of all other property.

Most debts are discharged under a Chapter 7 bankruptcy. The discharge of debt will release the debtor from any personal liability for payment. Once a deficit is discharged under Chapter 7, the creditor may no longer seek future restitution from the creditor. In most instances filers receive a discharge approximately two months after the meeting of creditors.

What happens to TTBGM’s leased equipment?

TTBGM has leased several pieces of equipment to maintain the golf course, including golf carts and mowers. Creditors cannot immediate repossess their equipment. The trustee appointed to the Chapter 7 case will determine how it will be handled.

The Chapter 7 bankruptcy trustee has 60 days after you file for bankruptcy to decide whether to assume (continue in force) an executory contract or unexpired lease as part of the property of the bankruptcy estate. If the lease or contract would generate funds for the unsecured creditors (creditors whose debt isn’t secured by collateral), and the court agrees that it should be assumed, then the trustee will assume it; otherwise, after 60 days elapses, it will be deemed rejected.

As a general matter, the trustee rejects most leases and contracts because they don’t have any value to the creditors (more below) or because the contract contains language prohibiting a transfer of interests.

Trustee recommends liquidation

(Updated Sept. 30)
The trustee appointed to the Bistro 60 bankruptcy case has requested that the court change the case from Chapter 11 to Chapter 7, essentially asking the court to liquidate the assets of TTBGM, the company owned by Tom Brown that operates the restaurant and manages the golf course at Trilogy.

In the motion filed on Tuesday. the trustee asserts that Brown has failed to disclose money owed to insiders; filed inaccurate monthly operating reports; and gave preferential treatment to insiders. TTBGM, the trustee states, “…fails to contest this evidence or offer any justification for the omissions in or converting the Chapter 11 bankruptcy case.”

In essence, the trustee claims that Brown’s plan to borrow more money from golf course owner Richard Cushman and retain control of TTBGM does not meet the standards of reorganization under a Chapter 11 bankruptcy case. “Assuming it is funded, a loan repaying one secured creditor does not establish feasibility.”

In an earlier filing, Cushman proposed to pay off the creditors of TTBGM provided that the case remain Chapter 11. He stated:

“I have advanced in excess of $3,700,000 prior to the filing of the petition herein to improve the real property of the Debtor. I am committed to pay, no later than October 10, 2020, the past due balances of TCF and secured party Byline Bank, to facilitate the Debtor exiting from the Chapter 11 by dismissal. I am prepared to pay TCF’s arrearages of approximately $43,000 plus the payments due Byline through 9-1-20 of $539,392.61, not later
than October 10, 2020, on the condition of dismissal of this Chapter 11. With all that I have invested, I am also committed to providing any needed funds to maintain obligations current goingforward.”

If the case is converted to Chapter 7 liquidation, Cushman’s offer no longer is valid.

The trustee’s motion to convert the case to a Chapter 7 liquidation carries considerable weight. The judge in the case will make the final determination at a hearing scheduled on October 6.

What follows are comments from the trustee’s motion:

• “The loan applicant, Richard Cushman, is an insider because he is the Debtor’s largest unsecured creditor and along with the Debtor’s principal, Thomas Brown, holds interests in entities that sublease the Debtor’s facilities and owe funds to the Debtor including CBGM, Coral Mountain Golf Club, LLC, and The Scene, LLC.”
• “The Debtor is proposing a structured dismissal that lacks detail and appears to have the consent of only one creditor. The Court should not approve a structured dismissal that provides for distributions that do not follow ordinary priority rules without the consent of affected creditors.”
• “And, despite the promises in the opposition, the Debtor remains in violation of its fiduciary responsibilities. The Debtor has not amended the schedules to disclose assets and monies owed by insiders, scheduled a hearing on the disclosure statement or employment application, produced copies of the 5 monthly operating reports disclosing its monthly transactions with insiders.”
• “Because the loan proposal does not rebut the evidence of ‘cause,’ the court must determine whether conversion, dismissal or appointment of a chapter 11 trustee is in the ‘best interests of creditors and the estate.’ The statutory directive requires the court to consider the interests of all creditors — not the dictates of any one creditor or group of creditors and certainly not the dictates of an insider.”
• “While the loan proposal favors the Debtor and the insider, dismissing the case may harm all other creditors because they will need to expend additional resources pursuing both the Debtor and its insiders outside of Chapter 11. A Chapter 7 framework will allow a disinterested trustee to review the Debtor’s financial records and ascertain whether assets may be recovered for the benefit of creditors. Conversion is in the best interests of the estate.”

Motion to repossess golf carts

(Updated Sept. 24, 2020) The company that owns the golf carts leased by TTBG has filed a motion seeking to repossess the equipment. PNC Equipment Finance claims that Tom Brown’s company has not made payments on the equipment and failed to provide proof of insurance as required under the lease. PNC claims that TTBGM has not made payments since November 2019 and is $75,930 in arrears. Total amount owed is $353,288. The equipment includes: 81 golf carts with GPS units, one beverage cart, and five haulers.

Brown: Cushman will pay Byline Bank past-due amount; opposes Chapter 7

(Updated Sept. 23, 2020) Key headlines from today’s creditor hearings:

• Tom Brown is working on a new business plan to run the Bistro and manage golf course operations under Coral Mountain Golf Club LLC.
• John Grossman, who founded Coral Mountain Golf Club in 2019, no longer will be part of that company, according to Brown. Principals will be Richard Cushman and Brown.
• Grossman has been managing the golf course and restaurant for several months. Grossman also formed another company that has been handling payroll for employees of the Bistro and golf course.
• Grossman has filed foreclosure documents against CBGM, which is owned 50% by Cushman and 25% each by Tom Brown and Vanessa Brown. The foreclosure is against the property parcel that includes hole #1 and the practice range.
• Brown failed to provided documents to the courts and creditors as he promised at the prior hearing. Those documents include golf course revenue and expenses since bankruptcy proceedings began as well as amended financial schedules for the court.
• Under persistent questioning, Brown says the agreement he gave Grossman to run golf course operations was in an unsigned memo he has yet to produce.
• Hearing on October 6 will determine if the Chapter 11 case is dismissed or converted to a Chapter 7 liquidation.

Prior to today’s creditor hearing, two motions were filed. The first, by Tom Brown, opposes any move to convert the Chapter 11 bankruptcy filing to a Chapter 7 liquidation. He states the following: “Richard Cushman has committed to pay, no later than October 10, 2020, the past due balance to allow Byline Bank to agree to forbear from foreclosure, which would allow the Debtor to exit from the Chapter 11 by dismissal. Debtor is currently
negotiating with Byline Bank the terms of such a forbearance, and will file a supplement with this court when such terms are finalized. Byline Bank’s proof of claim showed that the prepetition arrearages on its debt were $439,581.80. Mr. Cushman is prepared to pay $539,392.61, which are the payments due Byline through 9-1-20, to allow Byline Bank to reach agreement, not later than October 10, 2020, on the condition of dismissal of the this Chapter 11, but not if the case is converted to Chapter 7 or a trustee is appointed.

A second motion was also filed prior to today’s hearing: TFC Equipment Finance supports the Chapter 7 change. The creditor states that Brown is not up to date on payments for golf course maintenance equipment and has allowed a third party — Coral Mountain Golf Club — to use the equipment without permission. The creditor further states: “It appears that the Debtor is engaged in gross mismanagement of the estate due to the conflicts of interest in this case. There are multiple affiliated insider entities in the case,
including CBGM, LLC, Bar Piatto, LLC and Coral Mountain Golf Club, LLC, each of which plays some role in and around the golf course property. Debtor appears to be using the Property to maintain the course, but is not showing any income for such services. A debtor-in-possession owes a fiduciary duty to its creditors and a duty to keep the court and creditors informed about the status and condition of its business.”

Note of interest: The proposed lease agreement between TTBGM and Coral Mountain Golf Club LLC lists both Tom Brown and Richard Cushman as managers of Coral Mountain Golf Club. In other words, Brown proposes to be both landlord and tenant of the Bistro 60 property.

In a separate motion by the principal creditor, Byline Bank has requested additional time to file “…its Objection to Debtor’s Disclosure Statement and Chapter 11 Plan.” The motion states: “Byline is currently waiting for the completion of an updated appraisal on the Property, upon which it will rely, in part, for its objection to Debtor’s Disclosure Statement and Chapter 11 Plan.”

Trustee proposes to liquidate TTBGM assets

(Updated September 16, 2020)

In a major shift in the bankruptcy case of Bistro 60, the U.S. Bankruptcy trustee has determined that the reorganization plan proposed by owner Tom Brown is not feasible and is requesting that the bankruptcy judge dismiss the case or convert it from a Chapter 11 case to a Chapter 7 case. If approved by the court, that means that the assets of Bistro 60 and TTBGM LLC would be liquidated. Under this scenario, the court would sell the assets for cash and pay creditors.

If the case is dismissed, TTBGM might be able to refile right away. When a bankruptcy case is dismissed for procedural reasons, meaning that the petitioner did not follow the court’s procedures and might have missed a deadline or filed the wrong forms, he or she can refile right away. This is known as dismissal without prejudice.

Dismissal with prejudice refers to cases where a bankruptcy is rejected because of dishonesty or abuse on the part of the petitioner. Examples of cases that may be dismissed with prejudice include those where the individual attempted to hide assets or filed the case in bad faith.

Individuals whose cases are dismissed with prejudice may be barred from filing for bankruptcy again for a specific period of time or even barred from discharging those specific debts forever.

In any case where a bankruptcy petition is dismissed, the individual loses the protection of the automatic stay. This means his or her creditors can resume their collection attempts until he or she gains bankruptcy protection again by successfully filing a case.

In filing the motion the trustee states that: “The Debtor lacks cash flow and revenues and has made little meaningful progress toward establishing feasibility to support a plan. Its financial reporting is not trustworthy. Although owed funds, the Debtor is unwilling to investigate claims against insiders.”

The trustee specified four areas where TTBGM failed to meet the requirements of a Chapter 11 reorganization plan:

  • The debtor leases its assets to insiders. The lease agreements and any revenue derived from the lease agreements are not disclosed in the schedules.
  • The debtor hopes to reorganize based on unsupported projections of future rental income.
  • The debtor predicts that its leases will produce income seven months after the petition date. In the interim, the debtor is not paying secured creditors.
  • The debtor’s refusal to investigate transactions against insiders constitutes “Cause.”

A hearing on the dismissal or conversion is scheduled for October 6.

Bistro reopens for outside dining

(Updated September 11, 2020)

Bistro announces it has reopened for patio dining from 4 p.m. to 8 p.m. on Tuesdays through Saturdays plus weekend brunch from 9:30 a.m. until 2 p.m.

Trustee unloads on Brown over faulty filings

(Updated August 24, 2020)

The U.S. Bankruptcy Court trustee in the Bistro 60 case severely criticized Tom Brown for a lack of transparency and accuracy in the documentation filed with the court. At the creditors’ hearing on August 26, Everett Green stated on the record that he was “very shocked” that he was learning for the first time that money from the operation of the golf course was not being reported to the court and to creditors. Green stated that the information should have been disclosed at the start of Chapter 11 deliberations in April. He accused Brown of failing to fully disclose the assets of TTBGM, the company that operates the golf course and Bistro 60. He demanded that Brown provide the court and creditors with information about agreements TTBGM has with Coral Mountain Golf Club, the company that has been operating the course for the past five months. Green also demanded to know where money collected by Coral Mountain is being deposited.

Other headlines from Monday’s hearing:

  • Brown said he hopes to have signed agreements with Coral Mountain shortly that would be provide TTBGM a portion of the profits from golf course operations, the restaurant and other enterprises, which would be used to pay off creditors.
  • Brown’s attorney objected to questions regarding the dispute over the Prerimeter Landscaping Agreement between Trilogy Maintenance Association and TTBGM, which is currently under arbitration. Brown did state that he objected to the Irrevocable Letter of Credit, an exhibit in the 2017 revised CC&Rs, an agreement that codified the PLA arrangement between the parties.
  • Brian Mooney, a charter member, said that they form the largest unsecured liability on the federal tax forms for TTBGM. Yet, Brown said that liability rests with CBGM, the company that owns the golf course land.

The hearing was continued to September 23.

Brown has lease/option to buy golf course

TTBGM files reorganization plan

(Updated August 11, 2020)

The proposed bankruptcy plan filed by TTBGM has run into a major obstacle. PS Funding has received permission from the bankruptcy court to foreclose and obtain possession of the La Quinta home owned by Tom Brown. Mr. Brown had proposed using equity from the home to restructure the debts for Bistro 60. It is unclear whether the TTBGM bankruptcy plan remains viable. The next creditors’ hearing is scheduled for Aug. 24.

(Updated August 6, 2020)

The company that owns and operates Bistro 60 filed its Chapter 11 reorganization plan on August 4. The plan proposes to restructure its debts to banks and other creditors and allow the business to continue to operate while it pursues a sale or lease. TTBGM also manages the Coral Mountain Golf Course. However, the course property is not part of this bankruptcy proceeding.

The key proposal in the plan is to restructure the loans the company has with secured creditors Byline Bank and PS Funding. Specifically, TTBGM proposes to pay:

  • Byline Bank interest-only payments at the rate of 5.25% for 30 months. The principal balance would then be amoritized over the following 25 years.
  • PS Funding interest-only payments at the rate of 8% for 60 months after which the outstanding principal balance of $1.01 million would be due in full.

Unsecured creditors under the proposal would be paid bi-annual payments equal to 1.25% of the principal balance. A balloon payment of $3.99 million would be due on January 14, 2025. If the sale of TTBGM assets are not sufficient to pay the remaining balances, unsecured creditors “shall receive a pro-rata share of the funds available.” The largest unsecured creditor is Richard Cushman, whose company CBGM LLC, owns the golf course property and is owed $3.7 million.

Priority creditors are the IRS and State of California for back taxes. TTBGM proposes to pay its IRS balance of $200,000 in 51 monthly payments, The State of California, which is owed $5,000 would be paid in full at the time the organization plan is approved.

Under the reorganization plan, Tom Brown, the president of TTBGM, would provide “oversight and assistance” in the operation of the Bistro. Brown would seek to “lease, refinance or sell” its real estate holdings, which include the restaurant and parking lot as well as Brown’s La Quinta home. Brown states the plan would provide sufficient funds “to pay all Allowed Secured and Unsecured Claims.”

Creditors will now respond to the proposed bankruptcy plan before the next hearing on August 24. PS Funding already has stated its objections to using Brown’s La Quinta home as security in the reorganization plan. (See the July 28 update below).

Creditors’ hearing postponed due to illness

The scheduled creditors’ hearing on the Bistro 60 Chapter 11 bankruptcy was postponed until August 24. The attorney for Tom Brown, owner of TTBGM Inc, said Mr. Brown was ill and could not participate in the scheduled July 28 hearing. Additionally, a bankruptcy reorganization plan was not filed with the court on July 27, as TTBGM had earlier promised.

(Updated July 30, 2020)

The company that owns Bistro 60 has run into opposition to its promised bankruptcy reorganization plan. A recent filing states that the reorganization plan “contemplates full payment to all creditors” using the value of the La Quinta home of Tom Brown, president of TTBGM.

However, the value of the private residence and its use in any reorganization plan is being disputed by PS Funding, which holds the first position on a deed of trust on the La Quinta home. PS funding states that it loaned TTBGM $881,250 in 2017 using the home’s equity as security. The motion contends that TTBGM ceased making payments on the loan in July 2019 and the loan fully matured on December 1, 2019. At that time PS Funding began the foreclosure process by recording a notice of sale. PS funding claims that Brown’s home is not necessary for the reorganization plan for Bistro 60. It further states that TTBGM “has no equity in the Property.”

In response, Brown claims the home has a higher value than PS Funding contends and that “there is significant equity and adequate protection for the claimant.”

On July 30, PS Funding filed two motions in rebuttle. The first states “Mr. Brown’s entire declaration, and the factual assertion made therein, lacks foundation, constitutes hearsay, contains both improper lay opinion testimony and expert opinion testimony, often calls for speculation and legal conclusions, is not substantiated or otherwise supported by necessary evidence, and is simply not accurate. Perhaps most aptly demonstrating its triviality.”

Second, PS Funding argues that its loan to TTBGM is “fully matured and the Debtor has failed to make any payments to PS Funding for over a year – since July 2019. PS Funding has a mere 3.83% equity cushion in the Property, justifying immediate relief from the automatic stay. Worse yet, the Debtor is allowing its president, Tom Brown, to reside at the Property rent-free, in direct contravention of the Loan Documents, and thwarting the rents assignment provision contained in the Deed of Trust. In addition, the Debtor has no equity in the Property, and the Debtor has failed to set forth any evidence – let alone argument – that the Property is necessary for an effective reorganization…”

A hearing on the competing motions is scheduled for August 6. The second creditors hearing on the Chapter 11 bankruptcy is set for July 28.

Delinquency motion filed by trustee

On June 17 the trustee for the bankruptcy case filed with the court a delinquency notice regarding the debtor, TTBGM, Inc. The filing states:

Based on a review of the databases maintained by Peter C. Anderson, the United States Trustee for the Central District of California, Region 16 (“U.S. Trustee”), the Court’s docket, and documents provided by TTBGM, Inc. (“Debtor”), it appears that the Debtor has failed to timely provide the following:

  1. Monthly Operating Reports. The U.S. Trustee’s Guidelines and Requirements for Chapter 11 Debtors in Possession (“U.S. Trustee Guidelines”) require all debtors-in-possession to file monthly operating reports detailing transactional activity for all estate accounts by the 15th day of each month for the prior reporting period. The docket indicates that the Debtor failed to file monthly operating reports for April and May.
  2. Establishment of Debtor-In-Possession Accounts. The U.S. Trustee Guidelines require debtors-in-possession to establish debtor in possession accounts at approved depositories to maintain cash of the estate. The Debtor has not provided proof of opening debtor-in-possession bank accounts with an approved depository.
  3. Declaration of Closure of all Pre-Petition Bank Accounts. The Debtor has not provided a declaration stating that it closed all pre-petition bank accounts including the name and address of the institution where the pre-petition accounts were maintained; account numbers for each account; the date each account was closed; the amount in the accounts at the time at closing; and a bank statement reflecting the ending balance on the date the accounts were closed.
  4. Proof of Real Property Insurance Coverage. The Debtor has not provided documentation showing that the real property it owns is currently insured and that the coverage is adequate to protect the interest of the estate.
  5. Proof of Required Certificates and Licenses. The Debtor failed to provide proof that it holds certificates and licenses required by federal, state, and local law for the lawful operation of its business.
  6. Statement of Major Issues and Timetable Report. The Debtor has not provided a description of the Debtor’s business, the events or circumstances that led to the filing, the major issues, problems and/or disputes to be resolved, and with whom, a proposed timetable to resolve the disputes and the expected date for filing the disclosure statement and plan.
    The above deficiencies must be corrected no later than July 1, 2020. Failure to comply may result in the filing of a motion to convert or dismiss this case.

Objection to firm representing creditors

UPDATED 6/13/20

The trustee in the Bistro 60 bankruptcy case on June 12 filed an objection with the court concerning the law firm representing TTBGM, Inc and Bar Piatto, LLC. The trustee states that Corcovelos Law Group should not represent both “because the entities appear to hold claims against each other.”

The trustee cites codes and case law that “prohibits counsel from representing adverse interests.” It asks the court not to approve the law group “…until the Firm demonstrates that it is disinterested and does not represent adverse interests…” in the case.

As evidence of the conflict, the trustee states: “TTBGM’s 2019 balance sheet, for example, reflects unpaid receivables owed by Bar Piatto. Neither entity is operating and it is in the best interests of each debtor to collect as much as possible from the other. Because the entities appear to hold claims against each other, the interests of TTBGM and Bar Piatto are adverse.”

The trustee cites the following examples:

  • TTBGM owes Bar Piatto approximately $147,462.85 in pre-petition loans.
  • One year prior to the filing, in 2019, arguably while insolvent, TTBGM repaid a $724,105.85 loan to Bar Piatto.
  • Three years prior to the filing, in 2017, TTBGM, loaned Bar Piatto $565,654.
  • Bar Piatto and TTBGM share common ownership.
  • Two years prior to the filing, in 2018, arguably while insolvent, Bar Piatto transferred $310,263.99 to TTBGM.
  • Bar Piatto owes TTBGM unpaid rent.
  • TTBGM’s 2019 balance sheet states that Bar Piatto owes receivables. TTBGM and Bar Piatto are jointly and severally liable to secured creditor Byline Bank for approximately $5.3 million.

“Many of these transactions are not disclosed in the schedules of either debtor. It is clear, however, that substantial funds were transferred between the entities and collection of the debt is in the best interests of creditors of each estate.”

A supporting document identifies several end-of-year liabilities on the 2017 tax return for TTBGM that it claims were not included in the original Chapter 11 filing. Among them are:

  • $3,499,462 – Charter Members Holding Payable.
  • $750,000 – Loan Payable
  • $26,921 – Auto Loan
  • $2,939 – American Express Merchant Loan Program.

Initial creditor hearing

UPDATED 6/4/2020

The Chapter 11 bankruptcy filing by the owner of Bistro 60 was the subject of a teleconference on June 3. Called a 341 hearing, it is an opportunity for the bankruptcy trustee and creditors to question the debtor under oath regarding assets, liabilities, and other matters that pertain to their bankruptcy case.

Participants in the hearing were:

  • Debtor: Tom Brown, president of TTBGM Inc, which is the management company that operates, but does not own, the golf course at Trilogy. Tom also is the head of Bar Piatto, LLC, the company that owns and managed Bistro 60 and the sports bar. Both companies filed for Chapter 11 bankruptcy protection on April 27. Mr. Brown’s attorney participated.
  • Bankruptcy trustee: Edward L. Green.
  • Creditors: Byline Bank, Peer Street Funding, Key Golf, TSS Equipment Financing, Internal Revenue Service.
  • Other identified participants: Wayne Guralnick, legal counsel for Trilogy HOA, Gary Turner, president of Trilogy HOA board of directors, and two residents of Trilogy.

Key information items:

  • Mr. Brown stated that he is in active negotiations with Josh Grossman and Richard Cushman to assume management of the golf course and Bistro 60. Mr. Grossman is the founding member of three companies: Coral Mountain Golf Club, LLC; Coral Mountain Group, LLC; and Coral Mountain Foundation, LLC. All three companies were formed in August 2019. Mr. Cushman is the founding member of CBGM, Inc, which owns the golf course property at Trilogy.
  • Mr. Brown stated that his companies no longer are managing the golf course or restaurants. Operations are being handled by Mr. Grossman’s company as they work on a deal. Mr. Brown said Grossman’s personnel have occupied the space for the last two months.
  • Mr. Brown stated that he hopes the deal with Mr. Grossman will be completed within 30 days and will form the basis of the bankruptcy reorganization plan to pay off creditors. Mr. Brown said the deal likely would be a lease of the premises and assignment of services for the golf course and restaurant operations. Mr. Brown said a third-party purchase of his company assets was “a long shot.”
  • When asked by the trustee why he filed for bankruptcy protection, Mr. Brown replied that the loss of business from the Covid-19 pandemic made it impossible to continue. He said he already was having financial struggles before the pandemic due to construction of the sports bar but felt confident he could continue to operate.
  • Byline Bank gave notice of default on their loans in November 2019. The bank issued a foreclosure notice in March 2020.
  • The representative for TSS Financing stated TSS Equipment Finance said that a lease for golf course maintenance was entered into on April 27, 2019 for $225,000. She said her company was not listed as a creditor in the initial Chapter 11 filing. Mr. Brown’s attorney said he would be filing an amended list of creditor claims.
  • In response to questions from Mr. Guralnick, representing Trilogy HOA, Mr. Brown said Coral Mountain Golf Club LLC is currently operating the golf course and collecting green fees. He also said that TTBGM has no equity interest in the golf course. The property he owns included the parking lot, restaurant space and the golf cart storage area beneath the restaurant. The driving range and practice greens are golf course property. Mr. Brown said that his management agreement with Mr. Cushman provided that any excess revenue over expenses (profit) would be paid to CBGM. Mr. Brown said golf course operations were not profitable in 2019 or the first quarter of 2020.
  • A Trilogy resident questioned Mr. Brown about $14 credits for residents at the restaurant as part of the PLA agreement with the HOA. Mr. Brown replied that the credits are currently not being accepted but would continue to be accrued and would eventually be honored.
  • Next creditor hearing was scheduled for July 28.

Final note: Tom Brown’s wife, Vanessa Brown, is listed as a member of Coral Mountain Group, LLC, in its Nov. 1, 2019 SI filing with the California Secretary of State’s Office.

Initial Chapter 11 filing (updated 6/2/20)

TTBGM, Inc., the company that owns Bistro 60 filed for Chapter 11 bankruptcy protection on April 27. Tom Brown is the sole equity owner of TTBGM, according to the documents filed with the Riverside Division of U.S. Bankruptcy Court. On the same date, Mr. Brown also filed Chapter 11 on a related company, Bar Piatto, LLC, for which he is listed as the owner and managing member. Bar Piatto, iniiially formed in 2012, holds the assets for Bistro 60’s restaurant equipment and was used to pay vendors who supplied food services.

A Chapter 11 filing allows the debtor to continue to operate its business as it proposes a plan of financial reorganization and to pay creditors over time.

In a bankruptcy filing, creditors are organized into distinct groups: those who have security in the bankrupt property through a lien, priority creditors such as the IRS, and creditors without security in the property. Priority creditors get paid first, followed by secured creditors.

Bistro 60 Bankruptcy

In the Bistro 60 bankruptcy filing, Mr. Brown lists assets of $11,445,400, all but $400 of which is the value of real property: Bistro 60 and his home in La Quinta. Liabilities total $11,204,250.

The Bistro property owned by TTBGM includes the 6,000 square foot restaurant, the 3,000 square foot golf cart barn, the parking lot and the roadway leading to the Bistro. It is a single tax parcel of 3.9 acres.

Here is the list of creditors of TTBGM, Inc.  and amounts owed, according to documents filed with the court through May 29:

Priority Creditors

  • $5,000 — State of California, Tax & Fee Administration
  • $200,000 – Internal Revenue Service
  • Secured Creditors
  • $5,299,250 — Byline Bank of Indianapolis
  • $1,000,000 – Peer Street of El Segundo, CA, a peer-to-peer lending platform for real estate loans.

Unsecured Creditors

  • $3,700,000 – Richard Cushman of Newport Beach, CA. He is principal owner of CBGM, LLC, which owns and operates the golf course.
  • $600,000 – Key Golf of Henderson, NV, a golf course maintenance company.
  • $300,000 – Statewide Service, Inc. of Palm Desert, a construction management company.
  • $60,000 – Imperial Irrigation District.
  • $40,000 – Coachella Valley Water District

Bar Piatto Bankruptcy

In the Bar Piatto bankruptcy filing, Mr. Brown lists assets of $301,100, including restaurant equipment and office fixtures. Liabilities total $5,803,250, the bulk of which is for Byline Bank related to the Bistro bankruptcy filing.

Here is the list of creditors of TTBGM, Inc.  and amounts owed, according to documents filed with the court through May 29:

Priority Creditors

  • $300,000 – Internal Revenue Service for disputed payroll taxes.
  • $120,000 – State of California Tax & Fee Administration for disputed sales taxes.

Secured Creditors

  • $5,299,250 — Byline Bank of Indianapolis (same amount as Bistro 60 debt; Bar Piatto pledged as security on TTBGM loan)
  • $1,000,000 – Peer Street of El Segundo, CA, a peer-to-peer lending platform for real estate loans.

Unsecured Creditors

  • $35,000 – West Central Produce of Norwalk, CA
  • $20,000 – Sysco Business Services of Cypress, TX, a distributor of food products & kitchen equipment
  • $15,000 – Crown Meats of Palm Springs, CA
  • $7,000 – Alsco of Yuma, AZ, a provider of restaurant uniforms
  • $7,000 – Hamilton Meats of Chula Vista, CA