BANGOR, Maine — A federal judge essentially has thrown out a bankruptcy filing by the owner of a Gouldsboro oceanfront campground.
Judge Louis Kornreich, presiding Friday in U.S. Bankruptcy Court in Bangor, ruled that Ocean Wood Enterprises LLC cannot file for bankruptcy because the company’s property, a 148-acre parcel in the Gouldsboro village of Birch Harbor, is not insured.
Insurance is required to file for bankruptcy in order to prevent any creditor claims from being affected in the event a liability claim arises after a debtor files for bankruptcy, according to attorneys involved in the case.
With the dismissal, representatives of the lending entity that holds the mortgage of the property say they intend to go ahead with a March 3 foreclosure auction on the campground. James Brunton filed for bankruptcy the morning of Feb. 17, hours before Schoodic Point LLC was set to hold a foreclosure auction on the property.
Officials with Schoodic Point LLC, which also holds the mortgage to an adjacent 2-acre parcel Brunton owns in Bunkers Harbor, said Brunton owes the company more than $7.3 million. The loan was supposed to be repaid last December, they said.
What might happen with the property has been a subject of local interest because of its possible inclusion in a resort development that has been proposed for the Schoodic Peninsula. Winter Harbor Properties, which has indicated it plans to build a large-scale resort on 3,300 acres on the peninsula, has a right of first refusal on the campground.
John McVeigh, Schoodic Point’s bankruptcy attorney, said during a break in Friday’s hearing that if his client forecloses on the campground, Winter Harbor Properties’ right of first refusal will become null and void.
Land conservationists have voiced concerns about Winter Harbor Properties’ plans, saying such a development could adversely affect abutting Acadia National Park and the pristine character of the peninsula. Others have suggested the development would benefit the region, which suffered economically when the Navy closed a nearby base in 2002.
James Brunton, the main partner in Ocean Wood Enterprises and in its parent company, J.A. Brunton Inc., did not attend Friday’s hearing. According to David Johnson, Brunton’s bankruptcy attorney, Brunton is in Panama, where he resides for most of the year.
Brunton plans to return to Maine within the next few days, Johnson told the judge.
Kornreich said during the hearing that he was “not impressed” that Brunton was not at the hearing or that the property has been uninsured since December. The judge also made it clear that he was not reassured by Johnson’s testimony that Brunton has told him he was close to signing another deal with a different creditor to refi-nance the property.
“This is not a game of horseshoes,” Kornreich said. “Close is not enough.”
Brunton made Maine headlines in 2006 when his Pajaro Jai Foundation brought several members of Panama’s Chocoe Indian Tribe to Maine on the Pajaro Jai, a 92-foot sailboat the foundation had built in the Panamanian rain forest. The ketch, which sailed from Panama to Hampden, was built to draw attention to conservation and sustainability issues in Central America.
McVeigh told Kornreich the bankruptcy petition was the second such attempt by Brunton in the past 14 months to avoid losing the property in a foreclosure auction held by his client. In the first case, Brunton filed for bankruptcy but then withdrew his petition after Schoodic Point agreed to refinance the campground property.
“It is evident this is a serial filing designed to hinder and delay a foreclosure sale,” McVeigh said.
According to Michael Carey of Tranzon Auction Properties, which Schoodic Point hired to conduct the auction, his firm has received inquiries from 88 parties that are interested in bidding on the campground property.
Nicholas Bayley, the owner of Schoodic Point, told Kornreich that a December 2007 appraisal of the campground property estimated its value to be $12.5 million. He said that in light of the current real estate market, he could not guess what its value is today.
“I have no idea if we’ll get our money back or not,” Bayley said.
Johnson said after Friday’s hearing that he will have to talk to his law partners and to Brunton before they decide whether to appeal Kornreich’s decision to U.S. District Court. If they decide to appeal, he said, they likely would do it soon, before the rescheduled March 3 foreclosure auction.
“I think that [an appeal] is entirely a possibility,” Johnson said.