2013-05-18 / News

Arnold Transit Says Suit Filed by Financier Won’t Affect Boat Operations

By Wesley Maurer, Jr.

A lender is seeking foreclosure on a $3 million loan to Arnold Transit and its operating companies for, among other things, failure to make several payments on its loan since last September, and failure to inform it of the sale of two lots at the head of the Arnold Dock on Mackinac Island for the development of a hotel. The lender says it is being denied a share of proceeds from the property sale, which it holds as collateral on its loan and is seeking the entire amount owed to it under foreclosure.

The lots, purchased for $5 million by developers Ira Green and Melanie Libby as Main Dock 7271, LLC, are undergoing zoning and historic district review by the City of Mackinac Island, but city officials say the suit is unlikely to affect city deliberations, and Arnold Line’s president, Jim Wynn, characterizes the suit as merely a fight over sale proceeds by two lienholders.

The suit, filed by Walden Ventures, LLC, was filed April 19 in U.S. District Court at Grand Rapids.

Brent Rippe, manager of Arnold’s primary lender, Mackinac Island Ferry Capital, LLC, of Cincinnati, said in a May 1 statement provided by Mr. Wynn: “We would like to allay any concerns that you might have that this lawsuit will impact the operations of the business. The lawsuit is merely over the distribution of proceeds coming from the sale of a property in January of 2013. Pending the outcome of the lawsuit, funds sufficient to resolve the issue have been placed in escrow and will be available to distribute to the prevailing party.”

Mr. Wynn said the issue probably will be settled out of court “in a matter of weeks, not months.”

But Walden Ventures, through its attorney, Joseph Grekin of Schafer and Weiner, PLLC, Bloomfield Hills, told The St. Ignace News Tuesday, May 7, “At this time, none of the defendants have commenced negotiations with us.”

He added, “I do not think Mr. Rippe’s description of the litigation adequately describes the claims in the complaint.”

In its suit, Walden Ventures is asking the court to appoint a receiver to protect the lots and their income, and to sell boats and other assets in the foreclosure.

The default on payments and unannounced sale of the dock property triggered the foreclosure under terms of its loan made in 2011, Walden says in its suit, which includes exercising its rights to liens against the Arnold Line boats. It is the boat property that allows Walden to sue in federal court under federal maritime laws.

Walden also said it is worried about its opportunity to collect any of its investment because of the formation late last year of Mackinac Island Ferry Capital to buy out Arnold’s primary lender, Union Savings Bank. USB had loaned Arnold and its partners $18 million in 2011 to cover part of Mr. Wynn’s original financing of the boat company. It had the first lien on most of the property Mr. Wynn purchased from the Brown family in 2010. Walden invested another $3 million right after USB to cover additional debts and operating capital. It took second place, behind USB, to the collateral in the event Arnold defaulted on its loan.

But another investment group, Big Turtle Capital Partners, LLC, has a significant management stake in Arnold Transit and its affiliates, according to Walden Ventures, and it was this company that formed Mackinac Island Ferry Capital. Walden contends that Big Turtle’s control of both operations and debt could jeopardize its ability to ever get paid.

The defendants in the suit, which include a number of companies Mr. Wynn purchased from the Brown family, have until the end of the month to respond to Walden’s suit, Mr. Wynn said.

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