CW Makes Bid to Bring Carter's Grove Case to VA

Friday, March 11, 2011

Colonial Williamsburg has petitioned a California court to move Halsey Minor’s Carter’s Grove bankruptcy case to Newport News. New court documents have also revealed various ways in which the debtor allegedly defaulted on the deed.

Minor has alleged publicly that the home had been damaged by water and later repaired, which he said wasn’t disclosed at the time of the sale. He's also claimed that a restrictive clause attached to an easement on the property was not fair and kept him from being able to effectively run the home as a historic attraction and charge visitors (read a previous story about those allegations and CW’s responses).

Colonial Williamsburg recently petitioned the court to shift bankruptcy proceedings from California to Newport News, citing five key reasons: proximity to creditors, witnesses to the case who reside in Virginia, the debtor’s only asset is in Virginia, the shift would be more economical, and the case has local concerns.

In court documents, CW also pointed out that Carter’s Grove LLC was incorporated in Virginia and the case involves application of Virginia law. Creditors in the case, the largest of whom is owed $18,000, would be deprived of a chance to participate in the proceedings if they continue in California, according to CW.

In a statement supporting the shift to a Virginia court, CW’s Senior Vice President of Finance and Administration Robert Taylor elaborated on the various ways in which the LLC allegedly defaulted on the deed.

Taylor pointed out that Minor’s stated intention was to live in the home and operate a thoroughbred horse-breeding operation, which didn’t occur, and that as part of the deed, he agreed to maintain the property in good condition, which also didn’t occur.

Minor, through Carter’s Grove LLC, failed to uphold this part of the deed by not paying utility bills (see breakout) and allowing homeowner’s insurance to lapse, which CW was forced to pick up in order to protect the historic home.

“Had the utilities been discontinued,” Taylor wrote, “irreparable harm could have resulted in the interior of the mansion, including its irreplaceable woodwork.”

The debtor also agreed not to allow other liens on the property (aside from one by CW), though according to Taylor there are two other outstanding liens: one for up to $5 million to a subsidiary of financing firm GE Capital dated February 1, 2010, and another for $3.4 million to the auction group Sotheby’s, recorded just one day before Minor’s entity filed for bankruptcy.

Taylor also said Carter’s Grove LLC was allowed to go defunct at the end of 2010, and it was resurrected on February 7, 2011, a week before the Chapter 11 was filed.

Carter’s Grove LLC owes a total of more than $4 million on the note, and interest and fees are still accruing. Court documents indicate Minor still alleges his entity doesn’t owe the money due to defects in the property.

The California court will consider the motion to change venue on April 1.