U.S. Vacation Resorts Seeks Chapter 11 Bankruptcy
U.S. Vacation Resorts, which maintains seven campground sites for a membership of 5,000 recreational-vehicle owners, has joined a growing list of companies in its field that have sought protection from creditors in bankruptcy court.
The company, which is in the midst of relocating from Century City to Thousand Oaks, said it acted after its biggest creditor, First National Bank of Boston, refused to lend it any more money. USVR owes the bank $8.8 million.
USVR’s resorts--two in San Luis Obispo County and a total of five in Illinois and Michigan--will stay open and members will not be affected, said Gary G. Cowan, the company’s vice president for finance. About 2,000 of the members are Californians.
Amenities Described
The campgrounds have clubhouses, pools and saunas as well as water, electricity and sewer hookups. For the right to use the facilities, USVR charges a one-time initiation fee of $5,995 and annual dues of $218.
The company, which reduced its employment from 200 to about 60 over the past year, said it does not plan any more personnel cuts. Six-year-old USVR will employ 21 people in Thousand Oaks when its relocation to Ventura County is completed on Oct. 9.
USVR and many of its counterparts have been hurt by overexpansion, said John Curti, an analyst for Birr, Wilson & Co. in San Francisco.
In 1985, publicly held USVR lost $939,000 on sales of $9.9 million. For the six months ended June 30, it lost $910,000 on sales of $2.1 million.
“The industry was dependent on an ever-available line of credit, and when the banks cut them off, it was the beginning of the end,” Curti said.
Bank Exhibits Patience
Bernard Shapiro, a Century City lawyer representing First National Bank of Boston, said the bank “has gone above and beyond the call of duty” in its dealings with USVR. He said that the bank continued to extend credit to USVR even after the company fell below the financial requirements of their loan agreement.
Shapiro said the bank’s loans are secured by USVR real estate and other assets.
Over the past year, at least half a dozen companies in the field, including American Adventure in Kirkland, Wash., have filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code. Another firm, American Trails of San Diego, recently pulled out of Chapter 11 by attracting a buyer, NACO West of Bellevue, Wash.
Bob Longsdorf, editor-at-large for Agoura Hills-based TL Enterprises, which publishes Trailer Life magazine, said many companies have promised prospective members an eventual nationwide network of campground sites.
In effect, he said, the companies put pressure on themselves to acquire sites they couldn’t afford.
“Everyone was relying on increasing sales to service their debt, but the market became saturated,” Longsdorf said. “Many companies had good sales people and not-so-good managers.”
California Deputy Atty. Gen. John C. Porter in San Francisco called the industry “basically unregulated,” and said his office has filed six suits over the past four years against membership campground companies for misrepresentation. The attorney general’s office hasn’t investigated or filed any suit against USVR, he said.
