The future of Barbara Worth?
Investor group eyes Imperial Palms Resort
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The services are provided in light of the fact that sometimes (employees) are not sure whether there is going to be continued employment. They are loyal. Daniel Chiu, the principal owner of the Imperial Palms Resort at Barbara Worth
HOLTVILLE — With previous managerial missteps and an ongoing bankruptcy reorganization being addressed, Daniel Chiu, the principal owner of the Imperial Palms Resort at Barbara Worth, said he feels the worst is behind him.
The reason for Chiu’s renewed confidence is the “aggressive” courting of the business operation by a group of East Coast-based investors that recently resulted in a financial offer that is currently in escrow. “If everything goes well, and I expect it to go well, the sale will be complete in about a couple months,” he said. “And then, I won’t be here.”
If Chiu doesn’t appear to be overly sentimental about his potential departure, that’s because after nearly three years and millions of dollars in investment, he is ready to see different ownership succeed where he had struggled.
In the meantime, Chiu said he is committed to doing what it takes to keep the doors open and workers employed at the 92-year-old Valley institution.
“I would like to see this place continue for another 100 years,” he said. “That’s the reason I decided that this place can’t close.”
Court challenges
His attempt to keep the doors open in spite of flagging business operations are what had prompted Chiu to file for Chapter 11 bankruptcy in August. The resort’s distressed situation also makes it a relatively prime purchase for investors. The resort, which includes an 18-hole golf course, banquet hall, restaurant, and bar and grill, as well as a 104-room hotel, is currently appraised at more than $13 million, Chiu said.
Should the bankruptcy court approve the resort’s potential sale, Chiu and his partners stand to receive $9 million from the investor group. “They know already they are getting a lower price versus the appraised value,” he said.
Proceeds from the sale, if approved, would then go toward paying off the resort’s more than $8.7 million in liabilities, as well as about $839,000 in federal income and payroll taxes.
As of Friday, potential court approval appeared to be dependent on the resort’s ability to show proof the potential buyer has the funds needed to cover the $100,000 deposit reportedly currently in escrow.
The potential buyer, identified in court filings as First Golden Investment LLC, had apparently failed to provide Imperial Palms Resort (IPR) with proof of investors’ funds in time for a hearing Thursday, where a bankruptcy judge was to consider the sale’s possible approval.
Imperial Palms Resort now has until Monday to establish that its potential buyer indeed has the funds to cover not just the deposit but the remaining $8.9 million needed to complete the property sale, according to a U.S. Bankruptcy Court for the Southern District of California judge’s order issued Friday.
“The proof to be provided must establish that the necessary funds are held in a bank account accessible here in the United States by the First Golden Parties,” stated Judge Margaret M. Mann.
Failure to show proof of funds will result in the cancelation of a March 6 court hearing scheduled to rule on IPR’s motion to sell the property, court records indicated. Yet, despite such issues, Chiu said he places the probability of the sale going through at “about 95 percent.” Bankruptcy court filings also indicate that IPR had recently filed separate complaints challenging financial claims made against the resort by its two former owners, Darrly “Dee” Readshaw and Kevin Smith.
Those complaints, filed by IPR in Jan. 24, appear to be in response to a complaint Readshaw had filed Dec. 9 on behalf of unsecured investors that challenged Chiu’s attempt to present himself and his spouse as secured lenders deserving of preferential creditor treatment.
Past mistakes
Among the multiple parties seeking financial redress as part of the resort’s Chapter 11 bankruptcy filing is the hospitality consultant that Chiu had hired to help him renovate and manage the property after its purchase from Readshaw and Smith in mid-2015.
Chiu said he counts the hiring of Sader Hospitality Worldwide in June 2015 as one several missteps that contributed to the resort’s financial straits.
The decision to amend the name of the resort from Barbara Worth Country Club to Imperial Palms Resort at Barbara Worth had come at Sader’s urging, and appears to have prompted business to slacken, Chiu said. “That should’ve been a sign to me telling me that he didn’t have it together,” he said.
Ultimately, IPR and Sader would part ways before the completion of a three-phase renovation project that was projected for completion in December 2017. “It was mutually agreed that a friendly ending of the business relationship would be the best for both parties,” Chiu said.
Chiu acknowledged he remained somewhat detached from the business’ day-to-day operations immediately after his purchase of the property, instead relying on Sader. This situation, he said, appeared to have caused rifts among staff and management.
Chiu has since adopted a more hands-on approach to running the property, which he said appears to have resulted in an uptick in business.
He also credits his current employees with sticking with him through the uncertainty, even when payroll issues had arisen. “The services are provided in light of the fact that sometimes (employees) are not sure whether there is going to be continued employment,” Chiu said. “They are loyal.”
Future possibilities
Currently, about 40 part- and full-time employees work at the resort. That number is down from approximately 80 a year and a half ago. The possibility of having 40 individuals added to the county’s already high number of unemployed doesn’t sit well with county Supervisor Ray Castillo, whose district includes the city of Holtville.
“That’s a substantial hit to a small county like us.” Castillo said. He expressed hope the resort emerges from its current situation whole and capable of providing the type of services patrons have come to appreciate and rely upon.
Since the addition of its conference center in the 1980s, the resort has been the only local venue capable of accommodating crowds that exceed more than 1,000.
As the result of the two state prisons’ construction in the county, venues that can accommodate such large workforces for special events are needed. “That’s the only facility that can cater to a group that size,” Castillo said.
Should the property’s sale be approved, Chiu said he is hoping to secure lodgings at the hotel, not as an employer or employee, but in his capacity as a liaison to Chinese investors who are continuously eyeing economic development opportunities in the Valley.
In the past, Chiu was able to line up investors to fund the construction of the development project that includes the hotel that currently sits unfinished in Imperial.
Despite some significant setbacks with that project, Chiu said he expects it to be completed later this year. Similarly, part of the Towncenter development project that Chiu and his Oasis Growth Partners had undertaken in Calexico, and which now sits languishing, has attracted the attention of Chinese investors who are looking to establish projects that take advantage of the free-trade-zone amenities available in large swaths of the county.
“This would be like a beachhead for them,” Chiu said.