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Rivercrest Marina sold at bankruptcy auction

Bank buys marina, Ford buys condos;
both eager to re-sell

By Don Ward
Editor

MADISON, Ind. (November 2002) – A four-hour federal bankruptcy auction held Oct. 12 signaled the beginning of a new chapter for the beleaguered Rivercrest Marina in downtown Madison.
The U.S. Bankruptcy Court-ordered absolute auction forced the sale of Patricia Hereford’s 3-year-old marina, nine condominiums, a 10-acre parcel of riverfront land and a boat storage barn, plus office furniture, small boats and miscellaneous items.

Patricia Hereford

Patricia Hereford
at the Oct. 12 auction

The 15.5-acre marina itself was the first item auctioned, and Ed Bowman, representing People’s Trust Co., now known as MainSource Bank, won the bid at $470,000.The marina included 96 boat slips, including 36 covered, a ship’s store, fuel dock, launch ramp and transient dockage for boats up to 750 feet.
Madison businessman Dean Ford bid as high as $460,000 before bowing out. Ford did, however, outbid a group of others who tried to purchase individual condo units, which overlook the marina. There are 11 condos in all, but two had been sold prior to the bankruptcy filing. The remaining condos had been listed on the market at $249,000 each, and two penthouse condos offered at $349,000 each, according to RE/MAX broker Jim Pruett, who had the listing.
Successful bidders were required to pay 15 percent down at time of sale, plus a 10 percent buyer’s premium. The balance was due within 30 days.
Just three days after the auction, Hereford told the bankruptcy court in New Albany, Ind., that she planned to file a protest requesting that the judge not approve the auction. But within two weeks of the auction, the bankruptcy court judge approved the auction, allowing the high bidders to take possession of their property.
Hereford developed the project with former partners Jamie Visker and Garry Richeson, who live near Indianapolis. But their lender, People’s Trust Co., in April 2001 foreclosed on Hereford after she missed a payment on her $4.7 million loan. Hereford later countersued the bank, but the foreclosure resulted in last month’s bankruptcy auction as the first step to liquidate her assets to repay the loan. Her lawsuit against the bank is still pending.
The bankruptcy auction, meanwhile, generated $1.6 million, which was not enough to cover her debts. The entire property had been previously listed at $6.5 million on the open market.
At a bankruptcy court hearing held Oct. 15, Hereford signed over to the bank her Best Western Motel and Nex-Dor Restaurant and Lounge, both located on Clifty Drive on the Madison hilltop. She was given 10 days to prepare her personal bankruptcy to determine the value of her equity, which will eventually be divided among her creditors.
The bank took possession of the two hilltop properties on Oct. 25. Bank officials say they want to keep the motel and restaurant open so they will retain their value. They planned to hire someone to manage the properties until they can be sold.
Hereford also owns a home in Madison and the Clean Machine Car Wash on Clifty Drive. Hereford used the car wash as collateral in obtaining a $200,000 Small Business Administration loan from the city of Madison to develop the marina. The fate of her home and car wash, both used as collateral in her personal bankruptcy, are yet to be determined.
The legal wrangling in court followed a dramatic morning of bidding by a handful of people among the more than 200 who turned out to watch the auction. RE/MAX Group Auctioneers of Elizabethtown, Ky., handled the auction. Many boaters who moor their boats at the marina attended, along with bankers, Realtors, business people and “spectators” from throughout the area.
After selling the marina, auctioneer Jim Bramblett established bids on each of the nine condos. He then began soliciting a second round of bids on groups of condos or the entire lot. Ford emerged as the only bidder for all nine condos, while individual bidders were given the opportunity to raise their bids to keep the auction going.
Those bidding against Ford for the condos were Herbert Miller of Greenfield, Ind.; Matthew Wingham of Fort Wayne, Ind.; Elizabeth J. Griffith of New Albany; Bob Hughes of Madison; and Joseph Kirchdorfer of Bonita Springs, Fla.
In the end, Ford, who started his bidding at $867,500, eventually won the bid at $930,500. Afterward, Ford said he planned to privately resell all but two of the condos.
Larry Spann, who owns LMS Contracting in Madison, bought a 10-acre tract of riverfront land for $150,000. The parcel has been built up above the flood plain with the dirt that Spann’s company dug to create the marina basin at a cost of more than $1 million.
Spann, who had owned the very same parcel in the mid-1970s, said he planned to use the land as a barge loading facility. He said some equipment still remained along the riverfront where he had operated such a business there before.
L.D. Honeycutt, a marina owner from Bloomington, Ind., was the high bidder for a 3.5-acre parcel of land that included the eastern half of the old Madison Marina storage barn. He paid $64,000. Honeycutt, who had purchased another building at the 1200 W. Second St. marina site at a previous bankruptcy auction, also bought the 15-ton boat travel lift.
Marc Gray, owner of Cruisin’ Auto in Madison, bought the far west end of the storage barn for $48,000. He plans to store cars and other items there. Gray also tried to buy the eastern half of the barn, but lost the bid to Honeycutt.
The furniture at the Rivercrest sales office sold for $4,700. Several small boats, including the portable waste pump, also were sold.
MainSource Bank officials say they bought the marina because they felt the bidding was too low. They already have interested parties inquiring about purchasing the marina at a higher price.
MainSource Financial Group Inc. is based in Greensburg, Ind. The company has reported assets of $1.2 billion through four subsidiaries, according to filings with the Securities and Exchange Commission. The company operates 42 offices in 18 Indiana counties and seven offices in three Illinois counties. Locally, it has two bank branches in Madison, one in Hanover and one in Vevay.
Hereford attended the auction with her fiance, Nick Turner, and sister, Jackie Thacker, who resides in Florida. Following the auction, Hereford said, “I just hope whoever buys the marina will finish or expand on the dream.”
Hereford said she was displeased with the timing of the auction in the fall instead of the spring because it made the property less attractive to a potential buyer. “Now we’re going into winter, and we’re looking at auctioning a property that has little or no income until next spring,” she said.
Bank officials agreed that a spring auction would have been more desirable but that repeated court filings by Hereford’s lawyers postponed the sale date.
In addition to a virtual “who’s who of Madison,” the auction attracted several boaters from Madison and surrounding areas.
Bruce Brandt of Madison has kept his boat at the marina since it opened. He said he has been pleased with the conditions and service at Rivercrest, adding, “I don’t expect things to change much with the new owners. At least, I hope not, because I enjoy it down here a lot.”
Boaters Mike and Tammy Gadlage drove up from Louisville to watch the auction, but arrived after nearly everything had been sold. Gadlage owns Harrods Creek Marine Supply in Prospect, Ky., and says he just wanted to see who bought Rivercrest. “We just want it to stay open because it’s a perfect place for us boaters to come in to refuel and have a place to stay,” he said.
Ron Gassert, who manages the Rivercrest Dock Store and rents wave runners and pontoon boats through his Diamond G Marine business there, said he was optimistic about his future. After talking with the new marina owners, he said, “I’m pretty happy right now. I think I still have a job.”

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