Marbella Club Nearly Broke, Board Letter Warns : Bankruptcy: Opposition members label the dire statements ‘scare tactics’ to ensure support for a reorganization plan.

The operators of the swank Marbella Golf and Country Club said in a letter to members that the private club could run out of cash as early as next month, threatening plans for its rescue through U.S. Bankruptcy Court.

In a March 19 letter that The Times obtained Monday, Marbella’s board of governors said that the club’s financial situation is “terrible” and that losses in the first two months of this year, not including attorney fees, totaled $95,000. “We are nearly out of money,” the board stated in a letter seeking to rally the support of a fractured membership for its reorganization plan.

The board’s dire statements were rejected as “scare tactics” by Jon D. Anderson, a leader of an opposition group of club members. “I don’t agree that we’re about to go under,” he said. “The letter was designed to scare members into voting for the plan.”

Anderson said that five founding members--out of a total of more than 800 members--agreed two months ago to cover monthly losses until the court approves a bankruptcy plan. A hearing on the reorganization proposal is scheduled for May 10 in federal Bankruptcy Court in Santa Ana.

The letter is the latest in a series of missives sent by the board and various members about the financial condition of 4-year-old Marbella after title to the property was turned over to the club in September by the developers, led by Berg & Berg in Cupertino.

The club has been in turmoil since, and a small group of members has filed a lawsuit accusing the developers of misrepresentation and securities fraud.

Under an agreement between the board and the developers, the board agreed to try to reorganize the club under Chapter 11 provisions of federal bankruptcy laws. The board also agreed not to sue the developers over the way they managed the company. In addition, the board agreed to indemnify the developers for any loss from lawsuits by members.

In return, the board received a $1-million line of credit and other funds from Berg & Berg, which reportedly earned $13 million off Marbella.

That indemnity clause--part of the bylaws while the developers ran Marbella--has become the last and largest issue in a long-running battle that has split the membership almost evenly between founders and new members. The founders--so-called Series B members--paid $29,500 each to help develop the property and received 30 years of dues-free membership. Those who joined after the club opened--so-called Series A members--paid as much as $100,000 each in fees and are assessed annual dues of more than $3,500.

Stan Sanderson, the board’s president, said that “no one seemed to be interested” last summer when a newly elected board tried to tell members that the club couldn’t provide first-rate service with half of the members not paying dues. The bankruptcy filing was intended to force the issue, he said.

The tone of the March 19 letter, signed simply “The Board of Governors,” was both bleak and bitter. The letter said, for instance, that a property tax payment, due next month, will wipe out the club’s available cash and leave it unable to operate.

Sanderson said the club will pay its tax late, along with the penalty.

But the letter’s harshest words were for Anderson’s group and for Daniel J. Callahan, a member and Irvine lawyer who, with seven other members, sued the developers of Marbella. Both were in the founding group. The letter accused “certain” Series B members and Callahan of engaging in a “campaign of misinformation designed solely to further their desires for litigation at the expense of the club.”

“With each passing day, it becomes more and more obvious that the primary goal of these people is to pursue litigation and to sue someone . . . regardless of the ramifications and costs to the club,” the letter stated.

Both Callahan and Anderson, who also is a lawyer, bristled at the suggestion.

“The letter is full of half-truths and innuendo,” Callahan said. “I’m surprised the board would stoop that low just to get its plan approved.”

Anderson said he plans to turn over to the club any benefits he receives from challenging the developers.

“I’m just an ordinary guy at the club,” he said. “My house is in the neighborhood next to the club. I’m here to stay.”