RANCHO MURIETA, CA (MPG) - Asked to choose one of three options to keep the Rancho Murieta Country Club viable, the membership has voted overwhelmingly to authorize its board of directors to initiate bankruptcy.

Board President Eric Dutton announced the outcome in an update to the membership on Dec. 29.

The other two options were to slash expenses to maintain a balanced budget in 2024 or to increase dues by 20%. All three options were explained in a Dec. 1 letter from the board and discussed at Dec. 12 town hall meeting that attracted around 300 attendees. The board conducted the electronic vote between Dec. 18 and 22.

Of the 398 ballots sent to golf members, 331 responded, with 318 supporting bankruptcy. Of the 524 ballots sent to the social members, 300 responded, with 264 favoring bankruptcy. This was the equivalent of 66 full votes as each social member holds a quarter vote.

 “Thank you all for participating in this process, and it is quite clear what the membership wants,” Dutton said in his update.

Contacted by phone, Dutton said the directors voted at their Dec. 28 meeting to authorize the payment to retain the bankruptcy attorney “so he can give us the background on what we need to do.”

Dutton said the board won’t vote to initiate the bankruptcy process until the attorney confirms the club meets the criteria. One question might be the board’s plan to remain solvent in the coming year. “If we are making ends meet, do we qualify for bankruptcy,” he asked.

Dutton said the board adopted a preliminary budget at their meeting. Now he and the club’s controller will collaborate with the department heads to refine a balanced budget moving forward as best they can. The club also has received an insurance payment that will bolster cash flow.

“We will continue to function as efficiently as we can, for as long as we can, until we are at the point when we make that decision that it is the appropriate to initiate the bankruptcy process,” Dutton said.

That timing will be dependent on the attorney. “When he says quite clearly that you are not going to stay afloat for whatever amount of time, that will help us determine where that financial point is,” he said.

In additional action at the meeting, the board elected officers. Dutton will serve another term as president.  Bill Armstrong is vice president, Daniel Klaff, treasurer, and Walter Kim, secretary. “I’m looking forward to working with this board,” Dutton said. “They have the best interests of the club at heart.”

The board is considering bankruptcy so the club could be sold to a new owner who would make operational and capital improvements. Qualified buyers are interested in the club but only if it is free of successor liability. The club’s main liabilities are the cost of withdrawing from a union pension trust fund and a lawsuit settlement of $420,000.

A favorable ruling from a bankruptcy judge is the only hope of eliminating successor liability. A new provision in the law makes it faster and cheaper to file for Chapter 11 bankruptcy.

The club is unusual because it doesn’t own the two golf courses or the clubhouse and leases them from Rancho Murieta Properties. Carol Anderson Ward, the owner of the Murieta Equestrian Center, leads that investment group.

The lease is the club’s major asset and expires in 2028. Under bankruptcy, the lease balance would have some value so that the club would get a small amount of money for it. That would clear the lease so Rancho Murieta Properties could sell the property.

Ward attended the town hall as an audience member. She told the crowd she is interviewing prospective buyers with the means to make substantial improvements including a swimming pool. She would even consider a proposal to sell the hotel and its condominium lots as part of the deal. Ward will also ask the buyer to retain the current employees.

Presenters at the town hall highlighted the opportune timing for selling the club, citing willing buyers, landlord support, excellent course conditions, increased membership, and heightened economic activity both inside and outside the gates.

While some audience members advocated for all residents inside the gates to contribute to the club's support, presenters explained that, despite their agreement, it wasn't a feasible option.

(Refer to a separate story in this issue for an explanation of why the Rancho Murieta Association board won't seek financial support from its members for the club.)