Foreclosure appears on hall’s dance card
Request by Cowboys lender scheduled for hearing Monday
It could soon be last call for the popular but ailing Cowboys Dancehall, which is mired in bankruptcy.
A lender for the honkytonk wants bankruptcycourt approval to foreclose as early as next month on the 16.6-acre property at 3030 NE Loop 410. Chief U.S. Bankruptcy Judge Ronald King has set a hearing for Monday on Oklahoma City lender Crossroads 2004’s request.
Cowboys Far West, the bankrupt Arlington partnership that owns the country music venue, has been trying to find a buyer for the property. The judge told the partnership at a Nov. 8 hearing that it needed to have a signed contract by the end of last year, Crossroads said in a recent court filing.
“The sun has set on 2018,” Crossroads added. “There is no signed contract.”
The dance hall is listed for $12 million.
Even if King grants the lender’s request, any prospective buyers at the foreclosure auction may be reticent to bid as much as Crossroads hopes. That’s because the Texas Department of Transportation wants to condemn about a fifth of the property for about $600,000, Crossroad said. A TxDOT spokeswoman said the department is looking to acquire right of way for proposed Interstate 35 improvements.
The condemnation “may significantly impair the property, its usefulness as a venue and the property’s ultimate worth to potential purchases,” Crossroads said in its court filing. The lender is owed more than $5.2 million.
Crossroads bankruptcy lawyer Brian Engel of Austin declined to comment on his client’s plans.
“They’re owed a debt — the property’s collateral for the debt,” Engel said Friday. “We’re following the procedures to deal with that. And beyond that, if I said a word to you, I’d just be guessing.”
James Wilkins, Cowboys Far West’s bankruptcy lawyer, didn’t respond to a request for comment. Austin real estate agent Mark Connally, who has been marketing the venue, also didn’t respond.
Cowboys’ owners had hoped to lease the property from any buyer, the San Antonio Express-News reported in October.
Cowboys Far West filed for Chapter 11 in August to stop Crossroads from proceeding with a foreclosure. It marked the second time in the span of a little more than two years that Cowboys Far West had sought bankruptcy protection to thwart a lender from foreclosing.
During the first bankruptcy, Crossroads purchased the loan and subsequently worked out an arrangement for Cowboys Far West to make monthly payments on the debt. King issued an order confirming a reorganization plan in September 2017.
Cowboys Far West “defaulted before the ink dried on the order,” Crossroads said in its Jan. 2 court filing. The borrower has “paid Crossroads nothing.”
Crossroads said it tried to explore various options with Cowboys Far West, including having it deed the property over to the lender in lieu of
foreclosure. Crossroads said it offered to share half of any profits from a sale.
Cowboys President Michael Murphy, however, “demanded” the partnership be given a “20 year lease at below market rates” on the property, Crossroads said. Crossroads added that Murphy sought to prohibit it from selling the property for less than $12 million. He also wanted the partnership to receive at least $6 million from any sale.
Crossroads moved to foreclose Aug. 7 but was stymied when Cowboys Far West filed for bankruptcy the day before the scheduled sale.
Cowboys Far West “has made no effort to regularly pay its debt to Crossroads,” the lender said in its filing. “Interest and charges … are eroding any equity cushion in the Property impairing its value as collateral to Crossroads and probably to other creditors.”
Another lender, PrinsBank of Minnesota, is owed about $2 million. Bexar County is owed about $330,250 in property taxes for 2016 and 2018.
The state, meanwhile, wants bankruptcy court authority to proceed with condemnation on part of the Cowboys property. The condemnation was put on hold by the bankruptcy. King has set a hearing for Feb. 4 on the state’s request.
Cowboys Far West listed $10.3 million in assets and about $12.1 million in debts in a court filing in August. The dance hall property was valued at $10 million.
In its most recent financial results, the partnership lost more than $83,000 on almost $364,000 in revenue in October.