By: Robin Ford Wallace, Reporter
An Aug. 22
hearing in the TAS Properties bankruptcy case that is holding up Dade County’s
efforts to collect about $600,000 in back taxes on the Preserve at Rising Fawn
was simplified considerably by the withdrawal by Cornerstone Bank of its
motions against a bankruptcy sale.
“The main thing
that’s happening here is the creditors are backing off,” said Richard Jahn, the
bankruptcy trustee for the case, by phone on Wednesday. Jahn was explaining why
the hearing, scheduled for Thursday in federal bankruptcy court in Chattanooga,
had been foreshortened to a formality.
But Jahn said
that the proposed sale of the Johnson Crook land to the Georgia Land Trust –
the consummation in favor of which Cornerstone had withdrawn its motions to
release the Preserve land from bankruptcy protection – was now being held up by
an unexpected snag.
Davenport, speaking for the land trust, had earlier said it was not interested
in acquiring parcels containing structures. “Well, now all of a sudden they
are,” said Jahn.
The issue had
arisen just the day before, said Jahn. The land trust, which has proposed to
buy an estimated 1,200 acres of the Crook land for $1.2 million, had not
previously asked for one parcel but now wished to include it in the purchase.
“They insist there is a cave on it,” he said.
Jahn said he
didn’t know which cave it was that the conservancy wished to protect but that
it was on a parcel he wanted to hang onto.
“I didn’t expect there to be a dispute about this property,” he said.
Jahn said he
didn’t want to disclose details of the haggling but hoped to have news of an
agreement within the next few days. “We are close to getting there,” he said.
TAS is the
corporate entity to which Southern Group, the Marion County, Tenn.-based
developer of the Preserve at Rising Fawn, transferred the acreage it still held
there in 2011, after the collapse of a 100-percent financing scheme it had used
to sell building lots at the luxury second-home development.
scheme – whereby the developer allegedly fronted down payment money to “straw
buyers” who bought the lots on paper only, hoping to sell them back later at a
profit, and meanwhile taking out hefty bank loans on them, proceeds of which
were turned over to the developer – was later the subject of a joint
investigation of the Federal Bureau of Investigation and the Internal Revenue
Service, and resulted in two fraud and money laundering convictions in federal
district court. The FBI estimated the total defrauded from banks at $45
unpaid taxes had accrued on the Preserve acreage and Dade County held a tax
sale on Jan. 3, 2012, to auction off the Southern Group land. Bobby Davenport, acting for the Georgia and
Lula Land Trusts, was by far the biggest bidder.
But that sale
was invalidated when it was confirmed that Southern Group had in fact deeded
the land over to TAS some months previously, and that TAS had sought Chapter 11
bankruptcy protection a few days before the auction.
and TAS share the same ownership – family group Thomas and Joshua Dobson and
Travis Shields – but the partners contended the land was transferred in payment
for a debt between the two companies. That contention was questioned in the
bankruptcy proceedings that have ensued in the intervening months, as the
Chapter 11, or reorganization, bankruptcy, was converted to Chapter 7, or
Cornerstone, one of the lenders that had lost heavily at the Preserve, had won
a judgment in state court against Southern Group, and as the TAS bankruptcy
crawled through the legal process it had moved that the Preserve be released
from the automatic bankruptcy stay in favor of that prior claim.
But Jahn, the
trustee, objected to the motion, and another creditor bank, Farm Credit
Services, as well as Dade County with its claim for back taxes, penalties and
interest, had joined Jahn in favor of a bankruptcy sale.
And at an Aug.
8 hearing, attorneys for all sides had seemed in favor of allowing the Georgia
Land Trust to buy the Preserve land from bankruptcy, and Judge John C. Cook had
ordered last week’s hearing expressing hope that the agreement could be
Executive Chairman Ted Rumley, who along with County Attorney Robin Rogers
attended the abbreviated hearings on Thursday, said he understood that Jahn
wished to withhold from the Georgia Land Trust sale the completed houses and
other finished structures at the Preserve. “He’s going to hang on to about
$650,000 worth, or that he claims he can turn for that,” he said later
As for the
disputed patch of land that may or may not have a cave under it, Rumley said he
had a pretty shrewd guess about that. “This would be the clubhouse that was
never finished, if you keep going where those barns are down there, going
toward the mountain, whatever that parcel is,” he said. “There used to be a
pretty massive sinkhole there.”
had been filled in sometime during the ‘80s, Rumley said, by one of the Crook’s
“There used to
be nine perfectly stacked sections of rock over there that were there that,
according to my grandmother’s grandmother, dated back way pre the Cherokees
coming in here, and they were in a formation like, and nobody ever bothered
them,” he said. “They were mossed over and they were mini-pyramids, is what
they looked like.”
These had been
bulldozed to fill in the sinkhole, said Rumley.
previously that the sale of the Crook land to the land conservancy is “the best
thing that could have happened.”