The lease, which still had more than 13 years to run, earned more than $500,000 a year for Shulman and his corporation. The new holders of the lease were to pay substantially the same amount.
According to the lease, Kahn and South Bay were obligated to pay $2.6 million up front, no later than April 19. Some $2 million was to be put in a repair fund that Kahn could draw from to make the necessary improvements to the club. Shulman, as the landlord, retained the right to approve those expenditures and the people who would make the repairs. Court papers show that Kahn did not honor the obligation, instead negotiating an extension until April 20, but again failed to make the payment, court documents show. The due date was further extended, to July 9, but once again, papers say, South Bay breached the agreement.
According to court documents, there were non-monetary breaches as well.
Shulman said he entered into the agreement because Kahn promised “to repair and restore the premises into a first-class 18-hole championship golf course with a first-class country club, catering facility and restaurant.” But, Shulman claims, it did not work out that way. Instead, he said, Kahn has not kept up with even the most rudimentary repairs and operating necessities.
On Aug. 26, Berman made a motion to have the bankrupcy trustee make necessary repairs, based on a letter written by Kyle Seaman, a former assistant golf pro at the club. Seaman claimed that all the chemicals necessary to take care of the golf course had been repossessed, that both the water and power companies had sent disconnect notices, that several key suppliers had closed or suspended the club’s accounts because of nonpayment, that its bathrooms were soiled by urine and feces, that garbage had not been picked up for months and that members stay away because of the unsanitary conditions.
In addition, Seaman wrote, employees had not been paid for weeks, and the club had been run as a cash business, without records of the money taken in.
Shulman has asked to court to allow a Chapter Seven trustee, Kenneth Kirschenbaum, to take over and make the necessary emergency repairs to keep the club going until Kahn is relieved of the lease.