Judge Orders a Vote in Marbella Country Club Bankruptcy Case

Marbella Country Club’s bankruptcy case moved forward Monday when a judge approved the wording of a proposed agreement and ordered that members vote on it.

The decision was made over the objections of a committee representing about 350 founding members from among 800 who belong to the posh San Juan Capistrano club. The members don’t like a provision in the agreement aimed at preventing their suing one of the club’s developers.

U.S. Bankruptcy Judge James N. Barr ordered that members vote by mail and return their ballots by May 10. At that time, he will either rule on the reorganization plan or set a date to do so.

Ron Bender, the club’s bankruptcy lawyer, said that the vote is only advisory and that Barr could approve the plan even if Marbella members fail to approve it by a two-thirds majority that is the benchmark for bankruptcy cases.

Jon Anderson, who is representing fellow founding members in court, said he will recommend against acceptance of the plan because it fails to protect members’ rights to sue Berg & Berg Developers of Cupertino, one of two partners in Marbella Development Co., which built the course. While no lawsuits have been filed yet, he said, some are in the offing because members feel that the club was set up so that members have been defrauded.

The golf course filed for bankruptcy protection in September after members were split over how to cover a $50,000-a-month shortfall that had previously been borne by the developers. The simple solution--raising everyone’s monthly fees--was precluded because the membership is divided into classes that paid varying rates.

The founding members, who paid about $30,000 to join before the course was built, signed up with the condition that they would never have to pay monthly fees. Members who joined later paid as much as $85,000 to join and more than $3,500 in annual fees.

Under the agreement proposed, both classes of members would pay fees. The founding members, in return, would get some additional benefits, such as not having to pay a transfer fee if they sell their memberships.

Anderson said the ability to sue the developer is a key part of the financial package. Without it, he said, the overall package has less value to founding members.