Three days after Oakwood Country Club announced it would reorganize through bankruptcy proceedings, its bank account was seized by the City of Lynchburg.
Oakwood Country Club officials learned on Tuesday that the club's bank account actually was seized by the city of Lynchburg, not the Internal Revenue Service as the club originally thought Monday.
Because of the unexpected bank account seizure, Oakwood filed for Chapter 11 bankruptcy protection on Friday, three days earlier than planned.
“There were some late tax reports. We were waiting for them to calculate interest and penalties,” said Bill Martin, president of Oakwood’s board of directors. “So we had communicated with the IRS, so this was a complete surprise that they acted in that manner.”
Martin said that the IRS did not notify Oakwood before seizing the bank account Jan. 25. Oakwood officials discovered the action on Thursdaywhen they learned the club’s checks were not being honored, he said.
Martin said he did not know the amount of taxes that Oakwood owes.
Oakwood announced on Jan. 22 that it would seek bankruptcy protection so it could reorganize its finances.
On Monday, Judge William E. Anderson issued an order that puts Oakwood’s debts on hold and allows the club to continue operating while it restructures. Oakwood officials expect the club to operate throughout the bankruptcy.
On Sunday night, Oakwood held a closed meeting for club members to learn about the bankruptcy plans. About 70 people attended, Martin said.
“There have been a lot of rumors that the club was closing, or, you name it, there were all kinds of rumors which were not true,” Martin said.
East West Communities, the Midlothian-based firm that plans to build a neighborhood with about 130 homes on Oakwood’s defunct golf course, plans to buy the club and its assets through a court-supervised bankruptcy sale.
Then a new corporate partnership of investors will buy the club back from East West Communities.
The club will be renamed Oakwood City Club, Martin said.
Martin said that the new arrangement would “pretty much eliminate” the chance of club members being assessed a fee to raise capital.
Oakwood’s Chapter 11 bankruptcy filing shows that the club’s assets and debts fall between $1 million and $10 million.
This story was changed to reflect new information that the club's assets were seized by the City of Lynchburg.
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