Churchill Valley Country Club seeks penalty against creditors

The Churchill Valley Country Club.
The Churchill Valley Country Club.
Photo by Tribune-Review file photo
Patrick Varine
| Wednesday, Aug. 14, 2013, 9:16 p.m.

The former Churchill Valley Country Club property is the focus of a legal battle between the developer that bought the club's debt and creditors who say they are owed thousands of dollars.

With the postponement of a scheduled July 29 auction, it's not clear when the property might be resold and redeveloped.

The club, founded by four friends in 1931, in its heyday had more than 1,000 members.

Zokaites Properties LP is seeking sanctions in U.S. Bankruptcy Court in Pittsburgh against three creditors that it claims filed a court petition for involuntary bankruptcy against the defunct Beulah Road club solely to delay the sale, only to withdraw the petition once the auction was postponed.

“There is absolutely no legitimate reason for the filing of the involuntary petition (of bankruptcy) other than to intentionally cause a delay in the sale of (the country club's) assets and to try to obtain a more favorable result with this court that it could not achieve in state court,” said Jeffrey Hulton, an attorney for Zokaites Properties, a home builder.

Wexford-based Zokaites purchased the club's debt from PNC Bank.

Zokaites Properties owner Frank Zokaites said he wants to get the club's mortgage paid, but declined comment on future plans for the property.

Sam Grego, an attorney with Pittsburgh law firm Dickie McCamey & Chilcote who is not involved with the case, said it was unusual for a company such as Zokaites to purchase the club's debt and not the actual property.

“If they're interested in reopening a golf course in lieu of something like housing, having that debt position gives you a large leg up on that,” he said. “Generally, buying the debt puts you in a secure position, but it doesn't automatically give you an asset position.”

The club closed in January, and between unpaid taxes, mortgage balances and liens owes more than $2.8 million to creditors.

Unsecured creditors Duquesne Light Co., Sysco Foods and Harrell's are owed more than $77,000, and petitioned the court on July 25 to place the club into Chapter 7 bankruptcy protection.

Zokaites officials contended the bankruptcy was filed in bad faith, and should be dismissed.

Attorneys for the companies couldn't be reached for comment.

The three creditors filed the petition two business days before a scheduled July 29 auction of the club's property, ordered by Judge Christine Ward of Common Pleas Court of Allegheny County.

Money from the sale would have gone to satisfy the club's debt. The bankruptcy petition also triggered an automatic stay and postponement of the sale.

Grego, a former Churchill Valley member, said creditors likely are looking to recoup as much money as possible.

“It's almost always a reach to say that a creditor would get paid the same through a bankruptcy as they would through a judicial sale,” Grego said.

Hulton said because the club is a nonprofit corporation, an involuntary bankruptcy could not legally be filed against it.

The three creditors filed another motion on July 29, the day the sale was to take place, to withdraw their own involuntary bankruptcy petition.

Hulton said he sent a July 28 letter to attorneys for the petitioning creditors, asking that they drop the bankruptcy petition.

The Meridian Group, a Downtown-based investment banking and management consulting firm, was appointed as receiver of the club in January, and has made several attempts to find a buyer.

Patrick Varine is an editor for Trib Total Media. He can be reached at 412-320-7845 or

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