Salem Pointe Capital, LLC

IN THE UNITED STATES BANKRUPTCY COURT FOR THE
EASTERN DISTRICT OF TENNESSEE
In re
Case No. 3:24-bk-31702-SHB
SALEM POINTE CAPITAL, LLC 	Chapter 11
Debtor
MEMORANDUM ON SECOND MOTION BY CHAPTER 11 TRUSTEE
PURSUANT TO 11 U.S.C. §§ 363(B), (F), (K), AND (M), AND 365 AND FED. R.
BANKR. P. 2002, 6004, AND 6006, TO: (A) APPROVE SALE PROCEDURES, (B)
SCHEDULE A SALE APPROVAL HEARING AND OBJECTION DEADLINE, (C)
APPROVE THE FORM OF NOTICES OF THE MOTION TO SELL, THE SALE
APPROVAL HEARING, AND OBJECTION DEADLINE, AND (D) APPROVE
PROCEDURES TO ESTABLISH CERTAIN CURE AMOUNTS FOR EXECUTORY
CONTRACTS AND UNEXPIRED LEASES THAT MAY BE ASSUMED AND A
NOTICE RELATED THERETO; (E) APPROVE THE SALE OF CERTAIN ASSETS
FREE AND CLEAR OF CLAIMS, LIENS, ENCUMBRANCES, AND OTHER
INTERESTS; (F) APPROVE THE ASSUMPTION AND ASSIGNMENT OF CERTAIN
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
APPEARANCES: 	BASS, BERRY & SIMS PLC
Paul G. Jennings, Esq.
Gene L. Humphreys, Esq.
21 Platform Way South, Suite 3500
Nashville, Tennessee 37203
Attorneys for Gary M. Murphey, Chapter 11 Trustee
WOOLF, MCCLANE, BRIGHT, ALLEN & CARPENTER, PLLC
M. Aaron Spencer, Esq.
Post Office Box 900
Knoxville, Tennessee 37901-0900
Attorneys for Rarity Bay Partners
BRADLEY ARANT BOULT CUMMINS LLP
William L. Norton, III, Esq.
Austin McMullen, Esq.
1221 Broadway, Suite 2400
Nashville, Tennessee 37203
KIZER & BLACK, ATTORNEYS, PLLC
Melanie E. Davis, Esq.
217 E. Broadway Avenue
Maryville, Tennessee 37804
Attorneys for Plaintiffs in Adversary Proceeding Nos. 3:24-ap-03032-
SHB and 3:26-ap-03006-SHB
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FRANTZ, MCCONNELL & SEYMOUR, LLP
Michael W. Ewell, Esq.
550 W. Main Street
Suite 500
Knoxville, Tennessee 37902
Attorneys for Rarity Bay Community Association, Inc.
BURR & FORMAN LLP
David W. Houston, IV
222 2nd Avenue South
Suite 2000
Nashville, Tennessee 37201
Attorneys for Timbertop Land Company, LLC
PAUL RANDOLPH, ESQ.
ACTING UNITED STATES TRUSTEE
Tiffany A. DiIorio, Esq.
Howard H. Baker Jr. United States Courthouse
800 Market Street
Suite 114
Knoxville, Tennessee 37902
Attorneys for United States Trustee
SUZANNE H. BAUKNIGHT
UNITED STATES BANKRUPTCY JUDGE
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This contested matter is before the Court on the Second Motion by Chapter 11 Trustee
Pursuant to 11 U.S.C. §§ 363(b), (f), (k), and (m), and 365 and Fed. R. Bankr. P. 2002, 6004, and
6006, to: (A) Approve Sale Procedures, (B) Schedule a Sale Approval Hearing and Objection
Deadline, (C) Approve the Form of Notices of the Motion to Sell, the Sale Approval Hearing,
and Objection Deadline, and (D) Approve Procedures to Establish Certain Cure Amounts for
Executory Contracts and Unexpired Leases that May be Assumed and a Notice Related Thereto;
(E) Approve the Sale of Certain Assets Free and Clear of Claims, Liens, Encumbrances, and
Other Interests; (F) Approve the Assumption and Assignment of Certain Executory Contracts
and Unexpired Leases (“Sale Motion”) filed on June 4, 2026 [Doc. 938].1 Pending objections to
the Sale Motion were filed by the plaintiffs in Adversary Proceeding No. 3:24-ap-03032-SHB
(“Hoban Plaintiffs”) and the plaintiffs in Adversary Proceeding No. 3:26-ap-03006-SHB (“Lorts
Plaintiffs”) (collectively, “Objecting Property Owners”), and Rarity Bay Community
Association, Inc. (“RBCAI”), both of which also objected to the proposed assumption and
assignment of contracts or agreements as contemplated by the Amended Notice of (I) Trustee’s
Intent to Assume and Assign Certain Executory Contracts, Unexpired Leases of Personal
Property, and Unexpired Leases of Nonresidential Real Property, and (II) Related Cure Amounts
[Docs. 1149, 1060, 1105, 1155, 1209, 1212].2
1 The evidentiary hearing originally was scheduled with confirmation of the Third Amended Plan of Reorganization
filed by The Club at Rarity Bay, Inc (“TCRB”). and BEP Rarity Bay, LLC (“BEP”) on July 20, 2026 [Doc. 1082];
however, the Third Amended Plan of Reorganization was withdrawn on August 24, 2026 [Doc. 1234]. The hearing
also was to include the Court’s show-cause order concerning whether the case should be converted to Chapter 7, but
after hearing evidence over five days, the Court announced on September 17 that it was no longer considering
conversion and entered an order that day [Doc. 1286] finding that no cause exists to convert the case to Chapter 7 at
this time.
2 All other objections were either withdrawn or overruled for failure to prosecute. The Objecting Property Owners and
RBCAI are referred to collectively herein as “Objecting Parties.”
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At the auction on August 6, 2026, the successful bidder was Timbertop Land Company
(“Timbertop”) with a bid of $11,157,895.00, and the back-up bidder was Rarity Bay Partners
(“RBP”) with a bid of $10,950,000.00. [Doc. 1150.]
The evidentiary hearing on the Sale Motion and objections was held September 3, 11, 14,
16, 17, 18, 23, and 24, 2026, with closing arguments on September 25, 2026 (“the Sale Approval
Hearing”). The record before the Court consists of the following exhibits introduced into
evidence:
• 	Trustee’s Exhibits (designated at the Sale Approval Hearing and herein as T
before the exhibit number): 1, 2, 3, 4, 5, 6, 7, 8 (as amended by #1283-1), 9, and
10 (as amended by #1283-2);
• 	RBP’s3 Exhibits (designated at the Sale Approval Hearing and herein as R before
the exhibit number): 4, 21, and 22; and
• 	Objecting Parties’ Exhibits4 (designated at the Sale Approval Hearing and herein
as O before the exhibit number): 3; 9 (which is a duplicate of T7); 10; 11; 12; 15;
19; 20; 21; 22; 23; 24; 25; 26; 28; 29; 30; 31; 32; 33; 34; 35; 36; 37; 38; 39; 40;
42; 44; 45; 46 (only pages 18, 21, 25, 48, 49, 50, 106-07, 108-09, 111, 148, and
156); 47; 48; 49; 50; 51; 52; 53; and 54.
The Court heard testimony from the Chapter 11 Trustee, Gary Murphey (“Trustee”); Roscoe
High and Brandon Schempp, both of CBRE, Inc. (the court-approved real estate marketing firm);
Robert Chris Magda (the CEO and managing member of Timbertop); and property owners Terry
Aff, Tracy Lorts, Matthew Gibbons, and Rick Hoban. The Court also takes judicial notice of all
documents of record in this bankruptcy case pursuant to Federal Rule of Evidence 201.
The parties submitted a Joint Statement of Issues for Sale Approval Hearing on August
26, 2026 (“Joint Statement”) [Doc. 1241]. At the first day of the Sale Approval Hearing, the
3 RBP participated in the Sale Approval Hearing as a proponent of the Sale to Timbertop, along with the United States
Trustee and Timbertop.
4 The Objecting Property Owners and RBCAI submitted joint exhibits as Objecting Parties’ Exhibits.
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Trustee and RBP announced, and the Objecting Parties agreed, that the Court would adjudicate
only the proposed sale to Timbertop (“Proposed Sale” or “Sale”5) and that consideration of
RBP’s back-up bid would be held in abeyance for adjudication only if either the Sale to
Timbertop is not approved or if Timbertop is unable to close the transaction after approval of the
Sale Motion. The issues were further narrowed by consent6 at closing argument to the following
issues that are determined by this opinion:
1. Whether the Sale should be approved as an exercise of the Trustee’s good faith
and sound business judgment, considering the salient factors, including whether the Sale
was negotiated at arm’s length, without collusion, and in good faith under 11 U.S.C. §
363(b), and whether Timbertop has the ability to close the transaction;7
2. Whether the Trustee has shown under 11 U.S.C. § 363(f) that the Purchased
Assets8 can be sold free and clear of all liens, claims, interests, and encumbrances,
including the interests, claims, and encumbrances asserted by the Lorts and Hoban
Plaintiffs;9
5 The terms “Sale” or “Proposed Sale” as used herein mean the sale proposed by the Asset Purchase Agreement
(“APA”) that is Amended Exhibit T8.
6 At closing argument, the Objecting Parties withdrew the following issues in the Joint Statement: numbers 3, 4, 10,
13, 16, 17, 18 (as an independent objection), 19, 20, 21, and 22. Specifically, issue number 17 was resolved because
all parties stipulated that the sale does not purport to convey any Declarant Rights, which to the extent they exist in
Debtor are property of the bankruptcy estate. Additionally, the Trustee withdrew his request to waive or shorten the
14-day stay under Rules 6004(h) and 6006(d), mooting issue number 11 of the Joint Statement.
7 This issue was derived from the following issues stated in the Joint Statement, numbers 1, 2, 5, and 7. [Doc. 1241.]
8 The “Purchased Assets” are defined in the proposed APA.
9 This was issue number 6 in the Joint Statement. RBCAI acknowledged in closing argument that its objection is not
dependent on this issue.
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3. Whether the Trustee and/or Timbertop have shown adequate assurance of
future performance for assumed contracts;10
4. Whether Timbertop has acted in good faith to support a finding under § 363(m)
(issue number 9 in the Joint Statement);
5. Whether the injunction language in the proposed Sale Approval Order at Doc.
938-4 affects the Objecting Property Owners’ pending litigation (issue number 12 in the
Joint Statement);
6. Whether the Sale must comply with the right-of-first-refusal procedure set
forth in the Club’s membership plan before it can be approved and, if so, whether the
procedure has been satisfied;11 and
7. Whether the procedure for assuming, assigning, or rejecting contracts in
Federal Rule of Bankruptcy Procedure 6006, including the 100-contract limit in Rule
6006(f)(6) and the notice-content requirements of Rule 6006(f)(1)-(4), has been
satisfied.12
After closing arguments on September 25, the Court took the matter under advisement,
indicating that, because time is of the essence with the Sale, the Court would prepare an oral
ruling to be delivered at the first available opportunity, which was October 5, 2026. The Court is
issuing this written opinion to memorialize its oral ruling.13
10 This was issue number 8 in the Joint Statement. RBCAI acknowledged in closing argument that its objection is not
dependent on this issue.
11 This was issue number 14 in the Joint Statement. RBCAI acknowledged in closing argument that its objection is
not dependent on this issue.
12 This was issue number 15 in the Joint Statement. RBCAI acknowledged in closing argument that its objection is
not dependent on this issue.
13 This decision constitutes findings of fact and conclusions of law as required by Rule 52(a) of the Federal Rules of
Civil Procedure, made applicable to contested matters by Rule 9014(c) and 7052 of the Federal Rules of Bankruptcy
Procedure. To the extent any finding of fact shall be determined to be a conclusion of law, it shall be so deemed, and
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The Court has jurisdiction under 28 U.S.C. §§ 157 and 1334. This is a core proceeding
under 28 U.S.C. § 157(b)(2)(N). Venue is proper in this district under 28 U.S.C. § 1408.
I. FINDINGS OF FACT
A. BACKGROUND
Debtor filed its Voluntary Petition commencing this Chapter 11 case on September 29,
2024, and served as debtor-in-possession until August 13, 2025, when the Court appointed the
Trustee. Debtor (now through the Trustee) operates the Rarity Bay Golf Club (“Club”) and the
real properties and amenities located in Vonore, Tennessee. The Debtor’s assets include real and
personal property described in the Sale Motion. The Club includes an 18-hole golf course and
other recreational facilities, as well as a restaurant and event facility. As of the Sale Approval
Hearing, the Club had approximately 622 members,14 of which approximately 196 were golf
members.
Debtor is owned by Michael and Amy Ayers, and Mr. Ayers testified at the November 4,
2024 meeting of creditors that the primary reason for the bankruptcy filing was the
$3,508,098.00 judgment entered by the Monroe County Chancery Court in favor of RBP against
Debtor on March 1, 2024, and the related judgment entered on September 23, 2024, for post-
judgment interest and attorneys’ fees and expenses (collectively, “State Court Judgment”). As
explained by Mr. Ayers, Debtor sought bankruptcy protection because it did not possess $4
million in cash that would be required to post an appeal bond to stay execution by RBP of the
State Court Judgment pending appeal. He also acknowledged that Debtor had negative cash
to the extent any conclusion of law shall be determined to be a finding of fact, it shall be so deemed. During delivering
of its oral ruling, the Court reserved the right to issue this formal written decision and to make any edits as to format,
style, grammar, or citation, in addition to the rights under Federal Rule of Bankruptcy Procedure 9024, which makes
Federal Rule of Civil Procedure 60(a) applicable in bankruptcy proceedings.
14 Approximately 200 members objected to assumption and assignment of their membership agreements.
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flow for the year 2024 through September in an amount exceeding $423,000 and that Debtor’s
2023 tax return reflected a loss exceeding $489,000. Mr. Ayers blamed Debtor’s financial
situation on “protracted and frivolous litigation.”
The Rarity Bay community is a gated, waterfront, residential, country club community
with 1,331 platted lots (“Community”), all of which are annexed into the Community. RBCAI15
is the Community’s governing body, and since a 2023 court ruling by the Monroe County
Chancery Court that prohibited Debtor (through the Ayers) from firing and replacing RBCAI
board members, the property owners have controlled the seven-member board because each lot
owner has one vote in RBCAI.16 As explained by Mr. Hoban, the current RBCAI president
elected by the other board members, the property owners control RBCAI and its decisions
15 RBP raised near the end of the evidentiary hearing a challenge to RBCAI’s objection, arguing that the objection
was filed (along with all of RBCAI’s filings in this case) in violation of RBCAI’s bylaws. Such a claim came too late
in the Sale Approval Hearing as RBP did not raise it as an issue until the evidence was nearly concluded. Moreover,
the Court is overruling RBCAI’s objections to the Sale. Thus, the Court will not address the merits of RBP’s argument.
16 The chancery court’s decision was affirmed in part and reversed in part. Relevant here is the court of appeals’
explanation about Declarant Rights and how they impact control over RBCAI and through it, the Community. As
explained by the Tennessee Court of Appeals in Frisbey v. Salem Pointe Capital, LLC, No. E2023-01233-COA-R3-
CV, 2024 WL 3102873, at *1 (Tenn. Ct. App. June 24, 2024): 	“Declarant’s rights originally belonged to the
subdivision’s developer, and the Bylaws defined ‘Declarant’ as‘Tellico Lake Properties, L.P., a Tennessee limited
partnership, or any successors, successor-in-title, or assigns.’ . . . The Receiver transferred the Declarant’s rights to
[Debtor].” The court explained, “From the very beginning of the subdivision’s development, the Declarant’s rights
have included the right to amend the Bylaws [unilaterally].” Id. at *6. The court noted that “it [wa]s undisputed that
the development period [wa]s ongoing and that [Debtor] validly purchased the Declarant’s rights in 2015.” Id. The
court affirmed the trial court’s ruling that the amendment to section 8.5 in the Sixth Amendment to the Master
Declaration was contrary to state law so that the provision allowing the Declarant to remove any director was
unenforceable. This allowed the property owners to vote for their director of choice and, thus, control RBCAI and the
Community.
The Declarant Rights also carry power to alter covenants, conditions, and restrictions (“CC&Rs”) for the
Community, and the Objecting Parties’ position is that only RBCAI may exercise Declarant Rights. Currently, three
entities claim the ability to exercise Declarant Rights: Debtor, RBCAI, and RBP. The Monroe County Chancery Court
decision (currently on appeal) that caused Debtor to seek bankruptcy protection adopted RBP’s argument that Debtor
lost its standing to be Declarant no later than June 1, 2017, after Debtor terminated its partnership with RBP, because
Debtor owned no developable property subject to the Master Declaration. Until resolution of the appeal (currently
stayed by agreement between the Trustee and RBP), significant questions of law (and possibly fact) remain concerning
who may exercise the Declarant Rights over the Community. The Trustee testified that he initially agreed to stay the
fully briefed appeal because he was concerned about administrative expenses, but if the Sale is approved, he intends
to move forward with the appeal to have it set for oral argument.
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through the annual board elections, which allow groups of homeowners to combine their votes to
ensure their voice is heard on the board.
RBCAI provides services to the Community that include maintenance of the roads (which
RBCAI owns), the private sewer system and pipes, and the common areas. RBCAI also provides
24/7 security at the gate house. The entity operates a design review board to review plans
submitted for building of or modifications to houses for adherence to the design review manual.
It also monitors ongoing construction projects to ensure conformance with the plans. RBCAI
leases land from Debtor for its maintenance shed and storage, as well as for vehicle parking at
night. RBCAI funds its services to the Community through collection of assessments from
property owners.
Since the Ayers created Debtor (in partnership with RBP) to purchase the Club and
related assets out of a federal receivership in 2015, numerous lawsuits ensued from
approximately 2017 through 2024, in addition to the already referenced lawsuits involving
Debtor and RBP and RBCAI and Debtor. The parties acknowledge the long-standing and
continuing acrimony among various constituencies in the Community. That acrimony is
evidenced in part by the protracted litigation in this bankruptcy case, with the docket reflecting
more than 1300 entries in the two years since the petition was filed. The appointment of the
Trustee did not slow the pace of litigation in this bankruptcy case, as more than half of the
docket entries occurred since the Trustee was appointed. Before the Trustee filed multiple
adversary proceedings on September 29 to preserve claims under 11 U.S.C. § 546(a)(1)(A), five
adversary proceedings were pending before this Court involving more than 350 distinct parties.
Claims filed total 329, with general unsecured claims totaling more than $34.5 million. The
Court notes that most hearings in this case, even short status hearings, have resulted in the
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involvement of a dozen or more attorneys and attendance by more than two dozen homeowners,
with the gallery sometimes being full of parties in interest.
B. THE TRUSTEE’S SALE PROCESS
The Trustee is a highly experienced financial restructuring professional who has served
numerous times as a chapter 11 trustee in this and other districts. The Court finds the Trustee to
be a wholly credible witness whose testimony was supported both by other witnesses and by the
documentary record. The Trustee began his work in this case by meeting with the Ayers and
several homeowner groups to gather information and understanding about the Community and
operations of the Club. 	After resolving accounting issues with Debtor’s operations, he
concluded that there was insufficient cash flow from operations to litigate all of the claims
against Debtor.
The Trustee’s goal from his appointment has been to maximize value and minimize
claims. Once he sufficiently understood the Club’s operations and finances, he retained
Hampton Golf in January 2026 to take over operations of the Club while he focused on solutions
to maximize Debtor’s value. The Trustee initially explored the possibility of developing a
Chapter 11 plan, but he ultimately concluded that given the Club’s cash flow and the amount of
deferred maintenance,17 a sale would be in the best interest of the estate and parties in interest.18
In early 2026, the Trustee communicated with Debtor’s secured lenders, including RBP
as the transferee of ORNL’s secured claim, about his plan to hold a sale of Debtor’s assets. Once
17 The Trustee testified that substantial deferred maintenance affects the golfing cart path, greens, and bunkers and
includes inadequate kitchen equipment needing repair and cracks in the tennis and racquetball courts. 	Informal
discussions about costs to correct the problems led the Trustee to believe he would need from $1.5 million to $4
million for repairs, which was not feasible given the net operating income of the Club.
18 The Trustee spoke with representatives of TCRB, which was formed early in 2025, which in the fall of 2025, offered
the Trustee approximately $4 million (and later $4.5 million) to purchase Debtor’s assets. The Trustee rejected those
offers outright as insufficient to pay even the secured creditors.
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the Trustee determined that he should pursue a sale, he contacted CBRE, with which he had
previously worked. CBRE is one of the largest real estate firms globally with a large golf and
resort division, which handles brokerage services for golf courses, marinas, ski resorts, and
developable assets connected to such properties.
Initially, the Trustee proposed that RBP would be a stalking-horse bidder to set a floor for
bidding, but when the related Rule 9019 compromise motion with RBP was met with multiple
objections and skepticism by the Court, the Trustee withdrew the Rule 9019 motion and his first
sale motion. He still sought approval to employ CBRE to begin marketing the assets, and the
Court approved CBRE’s employment retroactive to March 25, 2026, by an agreed order entered
on May 8, 2026. [Doc. 913.]
CBRE’s marketing included a team of at least four real estate professionals. The team,
which previously had been involved in § 363 sales, reviewed Debtor’s financial records provided
by the Trustee, visited the golf course, discussed the exact opportunity with the Trustee, and
developed a set of comparable properties to try to determine the best approach for marketing the
assets. CBRE created an offering memorandum and a virtual data room that was populated with
information from the Trustee. CBRE then directly marketed the property to groups that would
typically be buyers of golf courses, including owners, operators, and developers for golf courses
and golfing communities. The CBRE team answered questions about the opportunity and
worked to ensure that anyone who might be interested was aware of the opportunity. The team
engaged in extensive digital marketing and email outreach by communicating the opportunity
multiple times to more than 10,000 contacts in its proprietary database plus other contacts that
the Trustee provided. More than 5,000 of the email recipients viewed the email, and 60 different
interested parties signed confidentiality agreements to access the data room. When information
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was added, revised, or clarified for the data room, CBRE team members notified everyone who
had signed a confidentiality agreement to access the data room. Additionally, CBRE team
members spent over 70 hours on introductory and follow-up calls with more than 35 potential
purchasers. They also hosted six official prospect tours for potential bidders.
After resolution of numerous objections to the Trustee’s proposed sale procedures, the
Court entered the Sale Procedures Order [Doc. 1017] on June 26, 2026. To the Court’s
understanding, none of the objections to the Sale arise out of any alleged noncompliance with the
Sale Approval Order, except the seventh issue enumerated above concerning Rule 6006
requirements for the notice of assumption and assignment.
The Trustee received four bids with a minimum bid of $8.9 million, deposits of $500,000,
and proof of funds by the deadline of July 23, 2026 (in compliance with the Sale Procedures
Order). One of the bids was disqualified by the Trustee because the focus of the purchase was
on Declarant Rights, which were expressly excluded from Purchased Assets as approved in the
Sale Procedures Order.
According to both the Trustee and the CBRE witnesses, CBRE assisted the Trustee with
qualifying the bidders, which is standard practice. This included ensuring each bid included
proof of funds, a deposit (with CBRE providing wire instructions), and an APA (redlined with
any revisions from the form APA in the data room), as well as researching the bidders online and
talking to the team’s market contacts to try to understand the bidder and its track record, if any.
CBRE’s Schempp19 testified that proof of funds for qualifying to bid can be multiple forms – it
varies by bidder and the source of financing or capital. He also stated that the proof-of-funds
19 Schempp has been involved in at least twelve sales of golf courses in his three years with CBRE.
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letters provided by the qualifying bidders in this case were standard industry practice20 in his
experience with § 363 sales. The three remaining bids were qualified, and the auction
commenced on August 6, 2026, with the Trustee not designating a stalking-horse bidder as
permitted by the Sale Procedures Order.
The Trustee explained that several issues were important to him in the sale process. First,
he did not want a successful bidder to charge new initiation fees to members. He resolved this
issue by an agreement from Timbertop that new initiation fees would not be charged for existing
Club members with a membership agreement.21 The Trustee’s goal was to give members an
option because so many were unhappy with the Club and the prospect of a new owner might not
satisfy the members’ concerns. He especially was pleased that he could negotiate this win for
members by offering the sale with no contingency for a minimum number of members (as stated
in the APA with both Timbertop and RBP), especially given that a buyer naturally would desire
to maximize income. The practical result is that all members who do not want their
memberships to be assumed and assigned will not be required to be members.
At the auction, along with the Trustee and his attorneys, Timbertop and RBP were in
person, and a third bidder was present virtually. Parties in interest were permitted to observe
virtually the official bidding at the auction, although the camera and microphones were disabled
20 RBCAI’s counsel acknowledged during closing argument that the record contains no refutation of the Trustee’s
testimony that he followed standard industry practice in accepting the proof-of-funds letter submitted with
Timbertop’s bid package.
21 The Court recognizes that although the Trustee, with Timbertop’s consent, is not proposing to assume and assign
the membership agreements of the Objecting Property Owners and that Timbertop’s purchase includes an agreement
not to charge new membership initiation fees to existing members, if the Objecting Property Owners want to become
members again in the future after their agreements are rejected (at some point after closing), they would be required
to pay new membership initiation fees. Magda, however, was clear that Timbertop will not assess a new initiation fee
on a transfer of property to a new purchaser by a then-existing member.
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during off-the-record breaks.22 The bidders were separated during breaks, and none of the
bidders communicated with another bidder during any break; in fact, the Trustee observed the in-
person bidders walk separately into separate offices during breaks, and the bidder that
participated virtually was in its own “Zoom room.” 	CBRE’s Schempp, who was also physically
present at the auction, confirmed that he also saw nothing of concern between bidders during
breaks. The bidders engaged in between ten and twenty rounds of bidding until one of the
bidders bowed out around $10 million. Thereafter, Timbertop and RBP engaged in additional
bids until Timbertop’s successful bid was not countered.
The Trustee expressly instructed all bidders that there could be no deals between them.
Before the bidding began at the auction, each bidder confirmed that they had engaged in no
collusion or coordination with any other bidder regarding bidding strategy, bid amounts, or
efforts to influence the outcome of the auction. [Ex. T7 at 7.] Each also confirmed that its
qualified bid was a bona fide offer, that it intended to consummate the sale if it became the
successful or back-up bidder, and that it had the financial capability to close the transaction with
no financing contingency. [Id. at 8.]
The ultimate outcome of the auction was a bid by Timbertop of $11,157,895.00, with
RBP’s back-up bid at $10,950,000.00, with the same net value to the estate.23
22 The Trustee’s counsel explained at the beginning of the auction that “in between public rounds of bidding, and in
some cases during a round, an off-the-record break may be taken at the discretion of the trustee to permit bidders to
consult with their representatives about further bidding or to permit the trustee to consult with one or more bidders for
any reason. . . . Increases in bids or changes in sale terms, if any, cannot occur off the record and must be done or at
least confirmed in the presence of all remaining bidders and the trustee and be on the record.” [Ex. T7 at 9-10.]
23 Under CBRE’s employment order, CBRE’s commission will be lower if RBP is the ultimate purchaser.
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C. TIMBERTOP & MAGDA
During his plan-investigation phase, the Trustee met with Magda, who initially expressed
interest in proposing a Chapter 11 plan for Debtor’s reorganization. Magda had become aware
of the Club and its financial difficulties when, approximately five months before the Trustee was
appointed, Magda first met the Ayers (at a Farragut area restaurant). Magda founded Timbertop,
along with Timbertop Builders (the construction affiliate) and Timbertop Growth Investment
Fund (“TGIF”) (the funding affiliate), and he is Timbertop’s CEO and managing partner.
Timbertop was created as a Tennessee limited liability company in 2024 and transitioned to a
Delaware LLC in 2025.24 It was created to pursue land acquisition for the purpose of sale or
lease. Although Timbertop was not created for any purpose related to the Club, this proposed
purchase is the only proposed acquisition in which Timbertop has engaged since its inception.
After Magda first met the Ayers and heard their story, he told them he would “take a
look” at the Club to see if it might be a possible investment for Timbertop. A few days after first
meeting the Ayers, Magda toured the Club and Community. He then stopped by a real estate
agent’s office, who suggested that he should talk with RBP if he was interested in the Club. The
agent gave Magda the phone number for Crystal Pate, who is employed by RBP and/or Apex
Bank (which is owned by Matt Daniels, who also is the principle in RBP). The first contact that
Magda had with the Ayers and Pate was in March 2025. Pate advised Magda that if he was
interested in purchasing the Club and its assets, he should buy all available developable property,
including interests and property owned by RBP and by BEP (which owns numerous lots for
development, has been party to prepetition litigation with Debtor and RBP, is a defendant (along
24 The initial APA filed with the Court reflected Timbertop as an existing Tennessee LLC, but after Magda’s testimony
that Timbertop is now a Delaware LLC, the Trustee submitted an amended APA that reflects Timbertop as a Delaware
LLC. The Court does not find this change to be material, suspicious, or improper.
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with various affiliates) in a pending adversary proceeding, and is creditor and party in interest in
this bankruptcy case).
1. 	John Rock
Around the time when the Trustee was appointed, Magda also randomly met John Rock,
who was an employee of Apex Bank. Initially, Rock was promoting to Magda the lending
services of Apex Bank, where Rock had worked for one or two years. Magda and Rock became
friends over their frequent interactions at the same Farragut area restaurant where Magda had
met the Ayers a few months before meeting Rock.
Then, by at least September 29, 2025, Magda offered Rock a position and an interest in
Timbertop as “commercial property director.” Magda understood that Rock had “retired” from
Apex Bank only three days before Magda invited Rock to join Timbertop. At that time, Magda
was aware that Rock had handled a $70 million transaction for Apex Bank in Cookeville.
Magda testified that he brought Rock on because of his knowledge about Bill Prince and Burwil
Construction Company, with whom Magda has consulted for plans to improve the golf and
country club if the Sale is approved.
According to Magda,25 the only work that Rock has done for Timbertop was to review
pro formas that Magda prepared. Rock does not receive a salary, but he owns 2% of
Timbertop.26 Magda was unable to explain Rock’s performance requirements to receive
compensation, but he acknowledged that Rock, as an owner of Timbertop, has an incentive to see
the Sale close and for Timbertop to be successful in its investment.
25 The Objecting Parties could have deposed Rock or subpoenaed him to testify at the Sale Approval Hearing, but
they did not.
26 Lauren Morgan, who is Timbertop’s “community relations director,” also owns 2% of Timbertop, with Magda
owning the remaining 96%.
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Rock first appears in communications with the Trustee as a CC recipient of an email from
Magda to the Trustee dated September 29, 2025. Magda communicated with the Trustee shortly
after his appointment, during his plan-investigation phase in late 2025. The September 29 email
acknowledged recent discussions with the Trustee about his fiduciary obligations and
Timbertop’s desire to serve as a sponsor for a Chapter 11 plan. The Trustee testified that much
of Rock’s communications with him concerned the debt owed by Debtor to ORNL Federal
Credit Union, which struck the Trustee as odd, and the communications in the evidentiary record
between the Trustee and Rock confirm the Trustee’s understanding. In one of the last emails
between the Trustee and Rock, Rock inquired of the Trustee about who purchased the ORNL
debt. The transferee was RBP. This evidence supports the Court’s conclusion that Rock was not
working with RBP while working for Timbertop because if he had been connected with RBP, he
would have known that RBP had purchased ORNL’s secured claim.
In any event, the Trustee made clear that he has not communicated with Rock since late
2025 and not at all about the Sale process. Moreover, the uncontroverted evidence is that Rock
did not participate in the bid or auction process.
2. 	Timbertop’s Comprehensive Plan for the Community
Magda acknowledged on cross-examination that the original dream for Timbertop’s
investment in the Club and Community, as stated in the Private Placement Memorandum
(“PPM”) [Ex. O15] issued by TGIF, was “a bankruptcy acquisition strategy . . . to initiate a
transformative resort development Project” in the Community. The plan included purchase of
521 vacant residential lots, including lots of Debtor as part of the Purchased Assets and lots
owned by RBP and BEP. [Ex. O15 at 47.] The dream also included developing an assisted
living facility with condos and an on-site health care center, as well as other commercial
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development. [Id.] 	Perhaps of greatest concern to the Objecting Parties, Timbertop has at some
point advertised that it wants to become the perpetual declarant so that it would be able to change
at will the CC&Rs that govern the Community and all the property within it. Such power, the
Objecting Parties fear, would change the character of the Community in a way that would reduce
their property values and burden their use of the amenities.
Magda acknowledged that he hopes to develop the lots in Phase 17 that are part of the
Purchased Assets. Whether he can do so under the law and existing CC&Rs, however, remains
to be seen given that Phase 17 has no infrastructure (which allegedly would need to be created in
collaboration with RBCAI) and, according to the Monroe County Chancery Court decision that
is on appeal, part of it is a designated wilderness area not authorized for development. Magda
also explained that he might build residential units to sale, to rent, and/or to sale to a (new27)
property owners’ association for short-term rentals. Again, whether the CC&Rs or the law
applicable to the Community would permit a new property owners’ association or construction
of units to sale to such an association for short-term rentals remains to be seen and is not
addressed by the Proposed Sale. That is, nothing about this Court’s approval of the Sale would
authorize such activity, which the Objecting Parties may oppose (in a state court) if they so
desire.
Much of the testimony elicited from Magda on cross-examination concerns the original
comprehensive plan, which all parties acknowledge would be governed by the Tellico Reservoir
Development Agency (“TRDA”) if the plan would change the character of the Community as it
was originally permitted by the TRDA when the Community was created in the 1990s.
27 Magda acknowledged that a new property owners’ association is not permissible absent an amendment to the Master
Declaration by the holder of Declarant Rights, which are not part of the Purchased Assets in the Proposed Sale.
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The Objecting Parties also questioned Magda extensively about the PPM itself,28 which
is a formal disclosure document governed by SEC Regulation D to notify potential investors of
the risks of the investment. [Ex. O15 at 4.] Magda insisted that the PPM was related to
Timbertop’s initial plan to propose a plan of reorganization and although TGIF never filed to
close the PPM, Timbertop was not using the PPM to raise funds to buy the Purchased Assets
through the APA.
Magda admitted that the PPM raised $1.7 million, the only asset of Timbertop or TGIF.
He testified that TGIF will determine at some point what to do with the $1.7 million raised by
the PPM but that it is not being used for the purchase under the APA.29
Magda acknowledged that Lauren Morgan sent an email to Community residents on
August 15, 2026, to communicate directly to the Community after Timbertop was the successful
bidder. [Ex. O10.] The problem is that the email is from TGIF, which Magda repeatedly testified
is not providing the funding under the proposed APA. Aside from the glaring problem with the
reference to TGIF’s involvement, which Magda explained was an oversight resulting from “use
of habit,” the letter does not raise red flags for the Court.
3. 	Magda’s Credibility Problem
Magda’s avoidant responses about some tangential facts certainly add complexity to the
Court’s analysis, as do the connections between John Brock30 and Timbertop and John Rock and
Timbertop.
28 The Court allowed testimony about and admission of the PPM over the objections of the Sale proponents to allow
some latitude to the Objecting Parties on the potential relevance relating to Timbertop’s good faith.
29 As detailed below, Magda also admitted that the $500,000 deposit submitted by Timbertop to be a qualified bidder
came from the funds raised by the PPM, which he intends to repay once the Sale closes.
30 Another odd connection concerns attorney John Brock, who represented Timbertop at the auction and in connection
with the PPM in 2025. He previously represented RBP in 2015, when RBP partnered with Debtor in connection with
the purchase of the Club and its assets from the federal receiver. Mr. Brock is the attorney who proposed and prepared
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More troubling is that on the Court’s own questioning, Magda was dubious and, at times,
outright duplicitous. First, he testified on questioning by the Court that he had not had any
further discussions with RBP about purchasing the Declarant Rights from RBP if RBP is
eventually determined to own Declarant Rights. He also testified very directly on cross-
examination that Timbertop had no current plan to acquire Declarant Rights from RBP. When
he delayed responding to a question about whether Timbertop had any current plan to acquire the
equity in RBP, the court asked Magda very directly why he hesitated. He then disclosed that he
had plans to buy RBP if he could do so. The Court then asked Magda if he had had any
discussions with anyone about acquiring the equity in RBP, and he acknowledged that he had
had numerous conversations with RBP personnel since the beginning of his interest in the
Community. He initially stated that “the most recent conversation with RBP was before the
auction began” – between the withdrawal of the Rule 9019 motion and the filing of the (second)
Sale Motion. Then, after stating that the discussion with RBP was left open once the auction
started (because Timbertop and RBP were opposing bidders), he revealed that since the auction,
he had discussions with Pate and Daniels about acquiring RBP’s equity and/or Declarant Rights
as recently as one or two weeks before Sale Approval Hearing commenced on September 3.
Since the auction, Timbertop also provided a letter of intent to purchase RBP for $30 million, but
as of September 17, RBP had not responded.
the Assignment of Right agreement between RBP and Debtor, and he prepared the Sixth Amendment to the Master
Declaration (“Sixth Amendment”), found in the record at Ex. O26, which was recorded shortly after Debtor was
created and purchased the Club and other assets from the federal receiver to give Debtor as Declarant extraordinary
rights to govern the Community by the imposition of various mandatory CC&Rs. Both RBP, through counsel, and
Timbertop, through Magda’s testimony, strongly deny that Brock’s representation of Timbertop in connection with
the auction is evidence of collusion between Timbertop and RBP. In fact, Magda acknowledged his awareness that
RBP characterized Brock’s representation of Timbertop in connection with the auction to be a conflict of interest. The
Court finds that the admittedly surprising connection is not evidence of collusion.
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Ultimately, however, the Court notes that Magda’s testimony on direct examination was
that he had no undisclosed business arrangements with RBP regarding the “sale process, bidding,
and auction.” That statement was not impeached. He also testified that there was no discussion
about the bids between the bidders and that there are no additional agreements, understandings,
or commitments regarding the sale process that have not been disclosed to the Trustee or the
Court. Similarly, his testimony, while lacking in full disclosure, appears true that he had no
further discussions with RBP about purchasing the Declarant Rights if they ultimately are
determined to be held by RBP.
Magda’s testimony that there was no collusion about the bid or Sale between him and
anyone associated with RBP has not been controverted by testimony of Magda’s discussions
with Matt Daniels and the possibility of Magda and/or Timbertop purchasing all of RBP’s assets.
Indeed, the text messages between Daniels and Magda (in the days between Magda’s first day of
testimony and his last), which were read by Magda on request of counsel for the Objecting
Property Owners, reflect a lack of collusion.31
Concerning Timbertop’s access to funds for the Proposed Sale, Magda initially testified
on cross-examination that the financing arrangement with Divine Acquisitions, LLC, was for a
15% interest loan with a two-year term, with a $7 million reserve for points, fees, and interest so
that there would be no debt-servicing requirement in the first two years. He expressly described
the term sheet with Divine Acquisitions as a $37 million commitment (including $30 million in
available funds plus $7 million in reserve for interest accrual). Magda asserted that after two
31 The text message from Daniels to Magda read: “Why is your attorney telling the Trustee that I’m trying to taint the
sale? That’s a lie. Secondly, I’ve been trying to protect both of us from a corrupt and incompetent Trustee.” Then,
Magda responded to Daniels: “I just checked with our attorney, and he is adamant that’s not the case. He said he’s
merely told the Trustee that we have an intent to buy all the owners out at some point but wants to take it one step at
a time. Neither our party or yours have ever colluded, and the Trustee confirmed that to be true. . . .”
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years, other capital partners would pay off the loan. When asked to identify those capital
partners, Magda declined, saying that he could not disclose the identity because no agreement yet
existed. He stated that he expected the loan would be paid off by conventional financing with
banks with whom he had previously engaged but that those lenders were not interested in
financing the purchase of a distressed asset and pending litigation. Magda described the plan as
securing a bridge loan until the property is stabilized, after which traditional lenders would be
willing to commit to long-term financing. He also explained that during the two-year term, there
were no milestones or timelines, except that he had provided a budget to Divine Acquisitions and
it was expected that the golf course and country club renovation would be complete and that the
cost and completion to “get Phase 17 to be saleable” (or “shovel ready”) would be accomplished
during the first two years.
Then, once the referenced term sheet (that was supposedly with Divine Acquisitions) was
provided before the fifth day of trial, it became clear that another entity was involved in the
funding of Timbertop’s purchase, namely Valor Capital Lending (“Valor”). [Ex. O49.] Magda
denied that the “Range of Terms” from Valor, which was produced by Timbertop’s counsel as
the term sheet at issue, was the term sheet he had previously referenced with Divine Acquisitions
(although no term sheet with Divine Acquisitions was ever produced). Magda then insisted that
other than the proof-of-funds letter from Divine Acquisitions, no other document exists with
Divine Acquisitions.
Concerning the Range of Terms document Valor, dated and signed by Magda on
September 4, 2026 (notably after the Sale Approval Hearing commenced), Magda testified that
there was no binding agreement with Valor. He acknowledged, however, that the source of the
$37 million that he had previously mentioned is Valor (notwithstanding that his earlier testimony
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left a clear impression, at least to the Court, that the source of such funds was Divine
Acquisitions). Magda could not say when he first communicated with Valor, but the record
reflects that Valor did not exist until it was organized in the State of Florida on July 28, 2026
(after the qualifying bid deadline under the Sale Procedures Order). [Ex. O50.]
When questioned about whether he intends to replace the Divine Acquisitions funding
with funding from Valor, Magda represented that Divine Acquisitions brought Valor to
Timbertop. Although Divine Acquisitions is not referenced in the Valor Range of Terms, Magda
said that if Valor is willing to fund the purchase, then Valor would pay off Divine Acquisitions.
Magda also testified, however, that Divine Acquisitions was not proposing a loan but would be a
capital partner. He described his understanding of the arrangement as follows: Divine
Acquisitions is getting a structured finance deal; it puts in the capital for the acquisition and
becomes a capital stake partner and then it finds other equity partners (either lenders or
otherwise). According to Valor’s Range of Terms, if it provides funding, it will be given a first
priority security interest on the Purchased Assets, as would Divine Acquisitions if it funds the
purchase. Frankly, Magda’s explanation of his understanding of the tranches of funding in the
Range of Terms does not add up. Ultimately, though, if Timbertop is unable to close the Sale,
then the estate will keep the $500,000 deposit and the Trustee will pursue approval of RBP’s
back-up bid.
Most concerning is Magda’s testimony about the source of the $500,000 deposit. As
referenced, he insisted that the PPM was separate from the proposed purchase under the APA.
Magda was then asked about the source of the $500,000 deposit, and after a delay, Magda
testified that “it was brought originally from Toney Cosey,” TGIF’s VP of Capital Markets,
“from his fund.” Noting the delayed and carefully worded response, the Court asked if Magda
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knew the source of the funds originally, and he responded, “No, ma’am.” On further questioning
by counsel for the Objecting Property Owners, Magda said “he couldn’t say” whether the funds
were Mr. Cosey’s personal money. As will be evident from the recitation of the testimony
below, those statements were patently false.
When asked whether Mr. Cosey had any obligation to repay TGIF or anyone else any
portion of the $500,000, Magda said, “Yes, I would pay back that money, of course, once I
close.” Next, Magda was asked who would pay it back, and he responded that it “would
probably come back from Timbertop.” Magda then testified that Timbertop has $500,000 to
repay Mr. Cosey, which caused the Court to inquire why the deposit came from Mr. Cosey and
not from Timbertop if Timbertop has the money to pay him back. Magda’s avoidant response:
“It was just our choice.” When the Court expressed dissatisfaction with the non-answer, Magda
said it was done to use leverage, to keep cash in the Timbertop accounts. (This, too, was false.)
The Court then asked Magda if Timbertop has any other expense, and Magda responded that it
has no other expenses, but he “wanted to keep cash in bank, so he didn’t want to spend if he
didn’t have to.”
When asked by counsel how much cash Timbertop has in a bank account, Magda
responded, “$650,000,” which he said was in Smart Bank. Magda denied any written agreement
with Mr. Cosey concerning the $500,000. Then, when asked repeatedly by counsel whether the
source of the $500K deposit was the $1.7 million raised by TGIF through the PPM, Magda again
equivocated, saying, “I just told you; it came directly from Tony Cosey.” When asked if he
knew where Mr. Cosey got the $500,000, Magda testified, “I understand that it was directly.”
Because the response did not make sense to the Court, the Court again engaged Magda, stating,
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“I don’t understand the response.” Counsel then asked, “Directly from what?” Magda
responded, “It comes directly from there, yes sir.”
After another question seeking clarification, Magda finally admitted that Tony Cosey
“probably did get it from the PPM, I would guess.” The Court then confronted Magda: “Why
have you been so reluctant to acknowledge that when you’ve been asked, do you know or
believe where Cosey got the money from?” Magda responded, “I don’t know, your honor. I’m
just nervous, I suppose. Sorry.”
Magda then disclosed after questioning by counsel that the $650,000 that Timbertop has
on hand in a bank account (actually in TGIF’s bank account) is also from the PPM funds,32
acknowledging that the $650,000 is what remains of the $1.7 million raised by the PPM. The
Court then asked Magda about his prior testimony that Cosey provided the $500,000 so that
Timbertop could keep money in its account. Magda claimed confusion.
Sadly, the Court can only conclude that Magda was intentionally false in his responses to
counsel and the Court about the source of the $500,000 deposit. The Court surmises that Magda
must have thought that he needed to keep secret the fact that Timbertop had used $500,000 of the
PPM funds because he was concerned about violating SEC rules governing the PPM33 and he
legitimately intends to pay back the funds once the Sale closes.
II. CONCLUSIONS OF LAW
While the facts before the Court are complex, the law is fairly simple. The Trustee seeks
approval of the Sale to Timbertop pursuant to 11 U.S.C. § 363, which states, in material part:
(b)(1) The trustee, after notice and a hearing, may . . . sell . . . , other than in the
ordinary course of business, property of the estate . . . .
32 Magda later admitted that Timbertop has spent another $500,000 of the PPM funds on plans by Burwil Construction
and varied costs and expenses, including attorneys’ fees relating to the purchase.
33 The Court need not analyze whether use of the PPM funds violates any SEC regulation or other law.
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. . . .
(f) The trustee may sell property under subsection (b) . . . of this section free and
clear of any interest in such property of an entity other than the estate, only if--
(1) applicable nonbankruptcy law permits sale of such property free and clear
of such interest;
(2) such entity consents;
(3) such interest is a lien and the price at which such property is to be sold is
greater than the aggregate value of all liens on such property;
(4) such interest is in bona fide dispute; or
(5) such entity could be compelled, in a legal or equitable proceeding, to accept
a money satisfaction of such interest.
. . . .
(m) The reversal or modification on appeal of an authorization under subsection (b)
. . . of this section of a sale . . . of property does not affect the validity of a sale . . .
under such authorization to an entity that purchased or leased such property in good
faith, whether or not such entity knew of the pendency of the appeal, unless such
authorization and such sale . . . were stayed pending appeal.
11 U.S.C. § 363; see also Fed. R. Bankr. P. 6004, 6006.
The Sixth Circuit has long held that a bankruptcy court may authorize a sale under §
363(b)(1) after considering the evidentiary record to determine whether the Trustee has presented
a sound business purpose (other than appeasement of major creditors) to grant a motion to sell
property of the estate outside the ordinary course of business. See Stephens Indus., Inc. v.
McClung, 789 F.2d 386, 389-90 (6th Cir. 1986) (adopting the standard articulated in Comm. of
Equity Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1071 (2d Cir. 1983));
see also In re Iovate Health Scis. Int’l, Inc., No. 25-11958 (MG), 2026 WL 1295907, at *8
(Bankr. S.D.N.Y. May 12, 2026) (citing In re Lionel Corp. for the rule that the articulated
business justification must be other than appeasement of major creditors). As the party seeking
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approval of the sale, the Trustee bears the burden to show a sound business purpose; however,
whether a § 363(b) sale should be approved “falls within the sound discretion of the trial court.”
In re Nicole Energy Servs., Inc., 385 B.R. 201, 230 (Bankr. S.D. Ohio 2008) (quoting Stephens
Indus., 789 F.2d at 388). “[T]he main responsibility of the [Trustee] and the primary concern of
the court [must] be the maximization of the value of the asset sold,” and the Trustee must “show
that [he] has obtained the best possible price for the asset.” In re New Era Resorts, LLC, 238
B.R. 381, 387 (Bankr. E.D. Tenn. 1999) (emphasis added) (citation modified). Although the
Trustee bears the burden of proof, “an object[or] to a § 363(b) motion is required to produce
some evidence supporting its objections.” In re EaglePicher Holdings, Inc., No. 05-12601, 2005
WL 4030132, at *1 (Bankr. S.D. Ohio Aug. 26, 2005) (citation modified).
Generally, courts consider the following factors when evaluating whether to approve a §
363 sale: “(1) whether adequate and reasonable notice of the sale was provided to interested
parties; (2) whether the sale has been proposed in good faith; and (3) whether the purchase price
is fair and reasonable”; however, “no one factor is determinative,” and the list of factors is not
exhaustive. In re Woodberry, 629 B.R. 239, 246 (Bankr. E.D. Mich. 2021) (citations omitted);
see also In re Maloney, No. 19-60895, 2020 WL 4810070, at *2 (Bankr. N.D. Ohio July 13,
2020) (“The sale of assets outside of the ordinary course of business generally requires proof
that: (1) there is a sound business purpose for the sale; (2) the proposed sale price is fair; (3) the
trustee has provided adequate and reasonable notice; and (4) the buyer has acted in good faith.”
(citation modified)). “A court must consider the unique facts and circumstances of each case as
opposed to applying a predetermined formula.” In re Family Christian, LLC, 533 B.R. 600, 626
(Bankr. W.D. Mich. 2015) (citation modified).
As explained by the court in Stephens Industries,
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In fashioning its findings, a bankruptcy [court] must not blindly follow the hue and
cry of the most vocal special interest groups; rather, [it] should consider all salient
factors pertaining to the proceeding and, accordingly, act to further the diverse
interests of the debtor, creditors and equity holders, alike. [It] might, for example,
look to such relevant factors as the proportionate value of the asset to the estate as
a whole, the amount of elapsed time since the filing, the likelihood that a plan of
reorganization will be proposed and confirmed in the near future, the effect of the
proposed disposition on future plans of reorganization, the proceeds to be obtained
from the disposition vis-a-vis any appraisals of the property, which of the
alternatives of use, sale or lease the proposal envisions and, most importantly
perhaps, whether the asset is increasing or decreasing in value. This list is not
intended to be exclusive, but merely to provide guidance to the bankruptcy [court].
Stephens Indus., 789 F.2d at 389 (quoting In re Lionel Corp., 722 F.2d at 1071). In short, “the
standard to be applied by the court in approving a disposition of assets is variously stated, but the
general thrust is that the proposed sale should be in the best interest of the estate.” In re Nicole
Energy Servs., 385 B.R. at 231 (quoting In re Telesphere Commc’ns, Inc., 179 B.R. 544, 552
(Bankr. N.D. Ill. 1994)); see also In re Family Christian, LLC, 533 B.R. at 627 (“When
considering offers for the purchase of assets, the [seller’s] duty, and the primary concern of the
bankruptcy court, is to ensure that the sale maximizes the value of the asset sold.”).
The Court gives “some deference” to the Trustee’s business judgment. See In re Cmty.
House Ass’n, Birmingham, Mich., 679 B.R. 877, 881 (Bankr. E.D. Mich. 2026) (citations
omitted). Nonetheless, “even this ostensibly deferential standard requires findings based on a
fair preponderance of evidence actually presented.” In re FirstEnergy Sols. Corp., 591 B.R. 688,
695 (Bankr. N.D. Ohio 2018) (explaining that “[t]he facially lenient requirement of an
‘articulated business justification’ for a transaction outside the ordinary course of business is not
a license to rely on pretextual justifications that fail to withstand scrutiny . . . , [which] is
particularly true when the proposed transaction and the motion filed seeking its approval are the
subject of a substantive objection.” (quoting In re Lionel Corp., 722 F.2d at 1070)). In the
context of a debtor’s proposed sale under § 363, some courts have found that “[a] debtor’s
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business decision should be approved by the court unless it is shown to be so manifestly
unreasonable that it could not be based upon sound business judgment, but only on bad faith, or
whim or caprice.’” In re SW Boston Hotel Venture, LLC, No. 10–14535–JNF, 2010 WL
3396863, at *3 (Bankr. D. Mass. Aug 27, 2010), cited with approval in In re Cmty. House Ass’n,
Birmingham, Mich., 679 B.R. at 881. “This is especially so in a case such as this, where all
creditors and all administrative expenses will be paid from the proceeds of the proposed sale.” In
re Cmty. House Ass’n, 679 B.R. at 881.
Though not defined by the Bankruptcy Code, “courts have defined a ‘good faith
purchaser’ as one who purchases the assets ‘for value’ and ‘in good faith.’” In re Junk, 566 B.R.
897, 916 (Bankr. S.D. Ohio 2017) (citation modified). “The good faith requirement, although
not expressly contained in § 363(b), has been grafted on to the approval of sales . . . because that
requirement appears in § 363(m) . . . [and t]ypically, the misconduct that would destroy a
purchaser’s good faith status at a judicial sale involves fraud, collusion between the purchaser
and other bidders or the trustee, or an attempt to take grossly unfair advantage of other bidders.”
In re Nicole Energy Servs., 385 B.R. at 235 (citation modified). “In assessing the good faith of a
purchaser, courts have considered factors such as: (1) whether the sale was negotiated at arm's
length; (2) whether any officer or director of the debtor holds any interest in or is otherwise
related to the potential purchaser; and (3) whether fraud or collusion exists among the
prospective purchaser, any other bidders or the trustee.” Id. (citations omitted). 	“A negotiation
or transaction is conducted at arm’s length if it is between two parties who are not related and not
on close terms and who are presumed to have roughly equal bargaining power.” Id. (quoting
Allegheny Ludlum Corp. v. United States, 367 F.3d 1339, 1348 (Fed. Cir. 2004)).
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As for the requirements of § 363(f), the provisions are disjunctive; thus, the Court need
find only one of the five subsections applicable. The relevant provision here is the existence of a
bona fide dispute, which “exists when ‘there is an objective basis for either a factual or legal
dispute as to the validity of the debt. . .’ [and i]t is the existence of a bona fide dispute rather than
the resolution of the dispute that is relevant under 11 U.S.C. § 363(f)(4).” In re Sumner Reg’l
Health Sys., Inc., No. 310-04766, 2010 WL 2521081, at *2 (Bankr. W.D. Tenn. June 18, 2010)
(quoting In re Pierce, 384 B.R. 477, 482 (Bankr. S.D. Ohio 2008); In re Nicole Energy Servs.,
Inc., 385 B.R. at 229).
1. 	The Trustee’s Good Faith and Sound Business Judgment
The first issue raised by the Objecting Parties questions whether the Sale should be
approved as an exercise of the Trustee’s good faith and sound business judgment. The Court
finds, based on the evidentiary record, that the Trustee’s decision to support the Sale is a good-
faith, reasonable exercise of his business judgment and is in the best interests of the estate, its
creditors, and other parties in interest.
The salient facts that show the Trustee’s good faith and sound exercise of business
judgment began with the Trustee’s decision to accept Timbertop as a qualified bidder (which,
technically, has not been challenged). Timbertop timely submitted its bid package to the
Trustee, and the Trustee deemed it a qualifying bid. Timbertop included in its bid package a
letter from Divine Acquisitions, which was described by the letter’s author, Eli Farhi, President
of Divine Acquisitions, as a “proof of funds letter” in connection with Timbertop’s proposed
acquisition of the Purchased Assets. [Ex. O44.]
The Trustee testified that after receiving Timbertop’s bid package, he primarily relied on
CBRE to look up both Timbertop and Divine Acquisitions. CBRE’s Schempp confirmed that his
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team investigated Divine Acquisitions and advised the Trustee that the firm appeared to be a
legitimate funder of mergers and acquisitions. The Trustee found the same through his own brief
internet research. The Trustee acknowledged that he did not confirm that the pledged $13
million belonged to Timbertop because, in fact, the Divine Acquisitions letter indicates that
Divine Acquisitions is the “provider” of funds for Timbertop’s bid.
As for the Objecting Parties’ concerns about Timbertop’s comprehensive plan for the
Community, at bottom, the Purchased Assets do not include the Declarant Rights. The Sale does
not allow Timbertop to activate its “dream” of becoming a perpetual declarant. Timbertop’s goal
of purchasing lots from RBP and BEP does not affect the Trustee’s business judgment
concerning the wisdom of the Proposed Sale.
The Trustee’s earliest email communications with Timbertop (beginning during his plan-
investigation stage shortly after he was appointed) indicate his good faith in the exercise of his
fiduciary duties. [See Ex. O48.] 	Both at the beginning of the Sale Approval Hearing and at the
end, during his rebuttal testimony (after he had heard the torturous cross-examination of Magda
about Timbertop’s intentions, its funding, and its communications with RBP about buying RBP’s
equity and/or any interest of RBP in Declarant Rights), the Trustee affirmed that he believes the
Proposed Sale was not the subject of collusion or any activity that decreased bidding or
artificially inflated bids to exclude another bidder. He testified that the Sale is in the best
interests of the bankruptcy estate.
Given the rock and the hard place where the Trustee sits with no prospect of a viable plan
of reorganization and the declining value of the Purchased Assets by continuing deferred
maintenance, as well as the continuing acrimony throughout the Community (through which his
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own motives have been irrationally questioned) and the ever-increasing administrative expenses,
the Court accepts the Trustee’s business judgment in support of the Sale.
In particular, the Proposed Sale satisfies the secured claims (to the extent they ultimately
are allowed) and will also satisfy the administrative claims and expenses and result in a
distribution to unsecured creditors.34 The Trustee will retain all cash, accounts receivable, all
Chapter 5 causes of action belonging to the bankruptcy estate, and the Declarant Rights (to the
extent that they exist in Debtor, with multiple parties having expressed interest to the Trustee in
purchasing the Declarant Rights35). The Trustee explained that the Sale is a neutral transaction
in that it will maintain the status quo over issues around Declarant Rights and the validity and
enforceability of the Sixth Amendment and related deed restrictions. This means that the estate
will still need to engage in litigation, but the Sale will allow a new owner to invest in much
needed capital improvements from long deferred maintenance to the golf course and restaurant,
which is beneficial to the Community as a whole.
As for the Trustee’s opinion about Timbertop’s ability to perform, he testified after
listening through seven days of testimony – some of it new information to him – that in his
business judgment, the Club could produce sufficient income from operations to continue to
operate, and Timbertop would also have funds from the Divine Acquisitions commitment of $2
million more than the purchase price Given the confirmed plan to employ Hampton Golf, he
34 The Trustee indicated that he expected a distribution to unsecured creditors of approximately $2 million based on
an estimate that CBRE expenses plus secured claims and administrative claims would total approximately $9 million.
35 During the auction, one of the bidders asked to include the Declarant Rights in the Purchased Assets, but the Trustee
rejected the bid because the Court had not approved a sale of the Declarant Rights. The bidding then continued for
the Purchased Assets only. The Trustee testified that the substantive discussions about the Declarant Rights held off
the record were not then put on the record because the only assets subject to the auction were the Purchased Assets as
approved by the Court in the Sale Procedures Order – i.e., because the Declarant Rights were not being auctioned,
neither he nor his counsel saw any reason to document the discussions for the auction record. Based on numerous
discussions, however, the Trustee believes he might eventually be able to liquidate the Declarant Rights for $1 million
or more, but any such sale would be subject to Court approval after notice and opportunity for objection.
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was unconcerned about Magda and Timbertop’s lack of experience in operating a golf course
and country club.
Simply, absent a sale (this one or to RBP as the back-up bidder – which undoubtedly
would garner even more objections than those addressed here), the Trustee has virtually no path
forward to maximize the value of the estate. Disapproval of the Sale, the Trustee believes, would
soon be followed by conversion to Chapter 7. Even Tracy Lorts, one of the Objecting Property
Owners, testified that keeping the Club open and operating is in everyone’s best interest.
Further, given the deferred maintenance, the time is now to consummate a sale so that a
new owner will have the off-season to make improvements before the spring golf season begins.
The Court finds that the Trustee balanced the real challenges and competing interests of all
constituents and agrees with the Trustee’s business judgment that no viable plan of
reorganization is likely (or even plausible) and that this Proposed Sale will result in a
meaningfully positive result for all parties in interest.
The first issue, concerning the Trustee’s business judgment, also encompasses the
Objecting Parties’ concern about whether Timbertop can close the transaction. The Trustee
reasonably relied on the proof-of-funds letter from Divine Acquisitions. As indicated above, if
Timbertop is unable to close the Sale, then the estate will retain the $500,000 deposit and seek
approval of the back-up bid by RBP. The Objecting Parties’ concern about Timbertop’s ability to
close is not a reason for the Court to reject the Proposed Sale under § 363(b).
2. 	Sale Free and Clear and Injunction Language in the Sale Approval Order
The second and fifth issues identified by the parties concern whether the Court may
approve the Sale under § 363(f) in light of the Objecting Property Owners’ pending claims. The
Court finds, based on the evidentiary record, that there exists an objective basis for a bona fide
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legal dispute as to the validity of Objecting Property Owners’ challenge to the Sixth Amendment
as alleged in the pending adversary proceedings. Such a finding, however, is unnecessary
because the Proposed Sale does not purport to transfer the Purchased Assets free and clear of the
Objecting Property Owners’ claims. The Trustee made clear that the Proposed Sale is neutral
and leaves the various challenges unaffected. Further, the amended APA [Am. Ex. T8] expressly
states that while Timbertop is not assuming liability for the pending adversary proceedings, those
litigation matters might affect Timbertop’s use of the Purchased Assets. Finally, the Court will
also include a clear statement about this issue in its Sale Approval Order, including the
injunction provision.
3. 	Adequate Assurance of Future Performance for Assumed Contracts
As an initial matter, this issue does not affect the Sale Motion because no objecting
party’s contracts are being assumed or assigned, and the requirement of adequate assurance is
relevant only to the § 365 analysis.36 Even when the concept of adequate assurance of future
performance applies, courts determine it “by the facts and circumstances of each case,” and the
debtor or trustee “need not provide an absolute guarantee of performance.” Androse Assocs. Of
Allaire, LLC v. Great Atl. & Pac. Tea Co. (In re Great Atl. & Pac. Tea Co.), 472 B.R. 666, 674
(S.D.N.Y. 2012) (citation modified); see also In re Natco Indus., Inc., 54 B.R. 436, 440 (Bankr.
S.D.N.Y. 1985) (“As designed by Congress, [the term adequate assurance of future performance
found in § 365(b)(1)(C)] does not mean absolute insurance that the debtor will thrive and make a
profit.”).
36 The Objecting Property Owners are adequately protected because Timbertop and the Trustee have agreed that their
consent is required for an agreement to be assumed and assigned, and they have not given their consent, with the result
that their agreements will not be assumed or assigned. Cf. In re Giftcraft, Ltd., 672 B.R. 173, 187 (Bankr. S.D.N.Y.
2025). Thus, they have no injury and no standing to raise the issue. See Mackinac Ctr. for Pub. Pol’y v. U.S. Dep’t of
Educ., 175 F.4th 692, 700 (6th Cir. 2026).
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Notwithstanding that the Proposed Sale is not separately subject to the § 365(b)(1)(C)
requirement for adequate assurance of future performance, the Court has also considered the
Objecting Parties’ fears about realization of Timbertop’s “dream,” especially the stated goals of
becoming the declarant in perpetuity to impose whatever CC&Rs that Timbertop desires; turning
the Community into a resort with commercial development; and the building of an assisted living
facility. Simply, the Court will not deny the Sale Motion because of these fears, which are not
wholly unreasonable given the long history of the Club and its owners. Ultimately, Timbertop’s
comprehensive plan is not achievable by this Sale. Nothing included in the Purchased Assets
would allow Timbertop to violate whatever restrictions exist concerning commercial or resort
development in or around the Community, and Timbertop is not purchasing the Declarant
Rights, any future sale of which would be subject to the Court’s approval.
The Objecting Parties also raise Timbertop’s and Magda’s lack of experience in owning
or managing golf courses. Timbertop, however, intends to continue the management contract
with Hampton Golf, which has been operating the Club successfully since January of this year.
The Trustee testified that Hampton Golf has confirmed Timbertop’s intentions to continue to
employ Hampton Golf for Club operations. Also, Timbertop is working with other professionals
(LJA Civil Engineering and Burwil Construction Company) to plan and implement needed
improvements to the golf course and country club facilities.
4. 	Timbertop’s Good Faith as a Purchaser Under § 363(m)
Though the bankruptcy code itself does not define the term “good faith purchaser,” courts
have adopted the “traditional equitable definition of a ‘good faith purchaser,’” defined as “one
who purchases the assets for value, in good faith, and without notice of adverse claims.” In re
Rock Indus. Mach. Corp., 572 F.2d 1195, 1197 (7th Cir. 1978). Thus, to be covered under the
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statutory protection of § 363(m), Timbertop must demonstrate that it purchased the Property “in
good faith” and that it did so “for value.” In re Abbotts Dairies of Pa., Inc., 788 F.2d 143, 147
(3d Cir. 1986).
As explained by the Sixth Circuit,
With regard to a showing of “good faith,” we have held that “[t]o show lack of good
faith, the debtor must demonstrate that there was fraud or collusion between the
purchaser and the seller or the other bidders, or that the purchaser’s actions
constituted an attempt to take grossly unfair advantage of other bidders.” 255 Park
Plaza Assocs. Ltd. P’ship v. Conn. Gen. Life Ins. Co. (In re 255 Park Plaza), 100
F.3d 1214, 1218 (6th Cir. 1996) (internal quotation omitted). The good-faith
requirement “speaks to the integrity of [the purchaser’s] conduct in the course of
the sale proceedings.” In re Rock Indus., 572 F.2d at 1198. Thus, the purchaser’s
“intended use of the assets purchased is not relevant to the good faith inquiry.”
Licensing by Paolo, Inc. v. Sinatra (In re Gucci), 126 F.3d 380, 394 (2d Cir. 1997).
In re Made in Detroit, Inc., 414 F.3d 576, 581 (6th Cir. 2005) (emphasis added).
The Court finds that Magda’s lack of credibility concerns only issues tangential to the
purchase and not the purchase itself. Without excusing Magda’s deceit, the Court concludes that
Magda’s dishonesty about the deposit does not establish bad faith in the purchase under the
APA. Simply, Magda’s lack of credibility on peripheral issues does not obviate that the
Proposed Sale was (1) negotiated at arm’s length in compliance with a Court-approved sale
procedure, (2) Timbertop is not related to Debtor or the Trustee, (3) no fraud or collusion has
been shown between Timbertop and any other bidders or the Trustee, and (4) no evidence exists
that Timbertop attempted to take grossly unfair advantage of other bidders. See In re Nicole
Energy Servs., 385 B.R. at 235; cf. Matter of Embrace Sys. Corp., 178 B.R. 112, 123 (Bankr.
W.D. Mich. 1995) (“If there is any degree of fraud, unfairness, or mistake, the bankruptcy court
should assess the impact of these factors on the sale at issue when the offer is compared to the
court’s finding of valuation of the assets to be sold.” (emphasis added)).
5. 	The “Whereas” Clause Issue
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Although not expressly identified as an issue for the Sale Approval Hearing, the
Objecting Property Owners argue that the APA’s inclusion of the right to mandatory social
memberships created by the Sixth Amendment in a “whereas” clause is improper because such
right is not expressly identified as a Purchased Asset and because the right is essentially a
Declarant Right that is not being sold. The “whereas” clause states:
WHEREAS, the Club and the Business are being sold with whatever rights are
presently available to impose mandatory social memberships, which are the subject
of pending litigation, and which litigation may or may not affect the ongoing
viability of some social memberships[.]
[Am. Ex. T8 at 2.] The APA defines “Business” as the “Rarity Bay Country Club.” [Id. at 1.]
“Club” is not expressly defined in the APA, but clearly it is the Rarity Bay Country Club, which
is owned and operated by the “Seller,” which is Debtor. [Id.]
First, the mandatory membership requirement of the Sixth Amendment is not a Declarant
Right. To be sure, the requirement was created by the Declarant (defined as Debtor). [Ex. O26 at
1.] The “Club,” however, is defined in the Sixth Amendment as “the Rarity Bay Golf and
Country Club and its successor or assigns.” [Id. at 5.] This distinction matters in the recorded
document that governs the rights and obligations of Owners (also defined [id. at 2]).
Ultimately, the Court is not now deciding the disputed issues arising from the Sixth
Amendment. The “whereas” clause of concern to the Objecting Property Owners merely makes
clear the risk connected to acquisition of the Purchased Assets, “which includes, but is not
limited to, the Business” (i.e., the Club). [Id. at 1.] The rights of the Business or Club clearly
include those provided by the Sixth Amendment, including the challenged mandatory
memberships in the Sixth Amendment. The Court finds no contradiction or ambiguity in the
“whereas” clause and concludes that the inclusion of the Club’s rights under the Sixth
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Amendment in the Sale does not purport to transfer any Declarant Rights and does not affect the
Objecting Property Owners’ rights to continue to challenge the Sixth Amendment.
6. 	The Right-of-First-Refusal Issue
Concerning the Objecting Property Owners’ assertion that the Sale violates their right of
first refusal, they point the Court to the following exhibits:
• 	Ex. T3, consisting of (1) a redacted, incomplete, and unsigned Application and
Agreement for Membership Privileges; (2) a redacted and incomplete Application and
Agreement for Membership Privileges that is unsigned by the Club; (3) a redacted and
incomplete Agreement for Membership Privileges with a redacted Club’s representative’s
signature; and (4) an apparently complete, redacted Application for Membership
Privileges that is unsigned by any representative of the Club;
• 	Ex. O3, the Rarity Bay Golf & Country Club Overview of Offering of Memberships,
September 1, 2008, which is unsigned (“Membership Plan”); and
• 	Ex. O26, the Sixth Amendment, which is signed by Debtor’s representative and is
recorded in the office of the Monroe County Register of Deeds.
The complete (but unsigned by the Club) version of the Application for Membership
Privileges contains the following provisions relevant to a potential right of first refusal:
2. Receipt of the Membership Plan. 	The undersigned acknowledges receipt of
Rarity Bay Golf & Country Club Membership Plan and the Rules and Regulations
dated June, 1997 (collectively, the “Membership Plan”), and agrees to be bound by
all its respective terms and conditions as amended from time to time. If approved
for membership, the undersigned agrees to fully substitute the membership
privileges acquired pursuant to the Membership Plan for any present and prior
rights in or to use the Club Facilities.
3. Membership Privileges in the Club. 	Membership in the Club entitles the
Members to use the Club Facilities, but is not an investment in the Club, nor does
the membership confer on the Member any equity or ownership interest or any other
property interest in the Club or the Facilities of the Club. 	Membership does not
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grant the Member a vested or prescriptive right or easement to use the Facilities of
the Club, but grants to the Member a revocable license to use the Facilities.
Members do not have any interest in the income of the Club and do not have the
right to receive any of the Club’s assts if the Club is dissolved. 	A member only
obtains a revocable license to use the Facilities of the Club.
. . . .
This Application for Membership Privileges shall be governed by and constructed
in accordance with the laws of the State of Tennessee.
. . . .
This Application for Membership Privileges shall not be binding on the Club until
the acceptance below is signed.
[Ex. T3.]
The Membership Plan contains the following under the heading, “Sale of Club Facilities
at Home Club”:
If, any time, the Club decides to sell the Club Facilities at the Home Club, the Club
agrees that it will first give the Premier Members and the Full Golf and Sports
Members issued pursuant to the Former Membership Plan the opportunity to
purchase the Club Facilities at the Home Club as follows: Prior to selling all or any
portion of the Club Facilities to any third party, the Club will first offer to sell such
Club Facilities to the aforementioned members by mailing to each such member
written notice of the terms and conditions (including price) pursuant to which the
Club is willing to sell such Club Facilities to such members. 	Thereafter, the
aforementioned members shall have ninety (90) days from the date on which the
Club mails such written notice to either accept or reject such offer; provided,
however, that the Club’s offer can only be accepted if approved by at least seventy-
five (75%) percent of the aforementioned members. 	During the ninety (90)-day
notice period, the Club agrees to meet with representatives of the aforementioned
members to discuss the terms and conditions of the Club’s offer and any counter-
proposal that such members may formulate; provided, however, that nothing in this
Membership Plan commits the Club to accept any counter-proposal that may be
formulated by the aforementioned members and the Club retains the right to reject
any such counter-proposal in the sole exercise of its business discretion.
[Ex. O3 at 19-20.37]
37 The Court also notes that TCRB was formed for the purpose of purchasing the Club in January 2025 (i.e., well more
than 90 days before the July 2026 bid deadline).
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The Objecting Property Owners point the Court to paragraphs 7.11(a) and (d) of the
signed and recorded Sixth Amendment as establishing, in conjunction with the Membership Plan
and the Application for Membership Privileges, the asserted right of first refusal. Paragraph
7.11(a) provides that “[a]ll Owners will be subject to the bylaws, rules, regulations, and charges
of the Club . . . . Social Membership shall entitle the Owner and his or her family and guests to
Social Membership privileges at the Club in accordance with the Club’s membership program.”
[Ex. O26.] Paragraph 7.11(d) provides that “Owners may upgrade their mandatory Social
Membership pursuant to the membership plan, by-laws, and rules and regulations of the Club, as
amended from, time to time.” [Id.]
The Court concludes that this record does not contain a writing signed by the party to be
charged (Debtor) that gives members the right of first refusal.38 The purported right of first
refusal proposes to allow members to purchase the “Club Facilities,” which the Membership Plan
defines as “golf, sports and social facilities.” [Ex. O3 at 1.] Whether those “facilities” are
realty39 or personalty, “in general terms, a ‘right of first refusal’ is the generic label commonly
used to describe a contractual right to preempt another.” Riverside Surgery Ctr., LLC v.
Methodist Health Sys., Inc., 182 S.W.3d 805, 811–12 (Tenn. Ct. App. 2005) (citation modified).
“Tennessee law has implicitly recognized two types of provisions conferring a right of
first refusal. . . . [In the first,] preemptive purchase rights conferred by a right of first refusal are
triggered when the grantor or seller receives an offer from a third party. The seller must then
38 The Court sustained the Sale proponents’ objection to documents offered through the testimony of Matthew Gibbons
for lack of foundation and authentication. The documents from Mr. Gibbons’s file were not the original agreements
and also did not bear the signature of the party to be charged (i.e., Debtor). The Court also denied the Objecting
Parties’ request to treat Mr. Gibbons as an expert in investment funding as unfair because he was not disclosed before
his testimony was offered and his qualifications were insufficient under Federal Rule of Evidence 702 to allow him to
challenge Timbertop’s proposed funding mechanism.
39 The golf facilities, at least, presumably would include the golf course, which is real property.
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offer the holder of the right the property at the price offered by the third party.” Abbott v. Abbott,
No. E2015-01233-COA-R3-CV, 2016 WL 3976760, at *3 (Tenn. Ct. App. July 20, 2016). For
the “second type of right of first refusal, the triggering event is the seller's intent to sell.” Id.
Regardless, under Tennessee law, as a contractual right, the parties’ intent is determined
by examining the document. See Bacon v. Sandlin, No. E2024-00674-CIA-R3-CV, 2025 WL
2555914, at *10 (Tenn. Ct. App. Sept. 5, 2025). Black-letter law requires:
For a contract to be enforceable, the parties must agree on the material terms.
Gurley v. King, 183 S.W.3d 30, 35 (Tenn. Ct. App. 2005). In the case of United
American Bank of Memphis v. Walker, No. 3, 1986 WL 11250 (Tenn. Ct. App.
1986), this Court stated: “In order for a contract to be binding it must spell out the
obligation of the parties with sufficient definiteness that it can be performed. All
the essential terms of a contract must be finally and definitely settled. None must
be left to determination, by future negotiations.” Id. at *2. This Court has repeatedly
held that price is typically an essential term in a sales or services contract. See id.;
see also Doe v. HCA Health Servs. of Tenn., Inc., 46 S.W.3d 191, 197 (Tenn. 2001)
(considering whether the contract contained a sufficiently definite price to be
enforceable); Tetra Tech, Inc. v. Performa Entm’t Real Estate, Inc., No. W2007-
02244-COA-R3-CV, 2008 WL 4457061, at *5 (Tenn. Ct. App. Oct. 3, 2008) (“A
contract may not be enforceable where an essential element, such as price or
compensation terms, is determined to be indefinite.”); Four Eights, LLC v. Salem,
194 S.W.3d 484, 487 (Tenn. Ct. App. 2005) (noting that an option to purchase was
not definite enough to enforce by specific performance where the parties could not
agree to a price) (citing 71 Am. Jur. 2d Specific Performance § 47); Castelli v. Lien,
910 S.W.2d 420, 427 (Tenn. Ct. App. 1995) (refusing to enforce a contract because
there were no sufficiently definite terms concerning the cost of performance).
Abbott, 2016 WL 3976760, at *4. As explained by the Tennessee Court of Appeals, “[t]he
general rule that a contract is not sufficiently certain and definite to be specifically enforced if
some of its essential terms are left for the future determination or agreement of the parties
themselves is usually applied if the contract price is left to be determined by the parties.
Accordingly, an option to purchase contained in a lease, at a price to be subsequently agreed
upon by the parties, is too indefinite to be specifically enforceable.” Four Eights, LLC, 194
S.W.3d at 487 (citation omitted).
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Based on its reading of the foregoing, the Court finds that the purported right of first
refusal is not enforceable under Tennessee law. First, the language is unclear about what
property interests are subject to a right of purchase. The Membership Plan states in Section A
that “[t]he Club offers use of exceptional golf, sports and social facilities (the ‘Club Facilities’)
located within the residential and recreational community known as Rarity Bay on Lake Tellico,”
and Section B expressly includes the golf course within the Club Facilities. [Ex. O3 at 1.]
Nothing, however, in the Membership Plan states whether the Club Facilities includes any real
property; nor does it define any real property to be subject to the right of purchase. This failure
to clearly define what property interests are at issue renders the right unenforceable as being
insufficiently certain or definitive.
Furthermore, if the Club Facilities includes real property, the Membership Plan is
insufficient to satisfy the Statute of Frauds, which requires that “any contract for the sale of lands
. . . shall be in writing, and signed by the party to be charged therewith, or some other person
lawfully authorized by such party. In a contract for the sale of lands, . . . the party to be charged
is the party against whom enforcement of the contract is sought.” Tenn. Code Ann. § 29-2-
101(a)(4). As noted, the Membership Plan in the evidentiary record is not signed by any party
and does not reflect recordation with the appropriate Register of Deeds. Additionally, the
purported agreement that references a membership plan is not signed by Debtor’s representative.
Further, the only complete Application for Membership Privileges in this record contains strong
language to limit the members’ privileges to a revocable license to use the Club facilities. [Ex.
T3.]
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Finally, the Membership Plan includes a provision immediately preceding the right of
first refusal that allows for modification and termination of the Membership Plan in a way that
appears to negate any binding obligation on the Club:
Modification and Termination of Membership Plan
The Club reserves the right, in its sole and absolute discretion, to modify the terms
of this Membership Plan, provided such modification is not materially adverse to
the rights of the members. Any change or modification to the terms of this
Membership Plan which are materially adverse to the rights of the Club Members
must be approved by the majority of the affected members. The Club further
reserves the right to terminate this Membership Plan or any particular membership
classification, category, or dues category, to discontinue operations of any or all of
the Club Facilities, to sell or otherwise dispose of the Club Facilities, to convert the
Club into a membership-owned club, and to make any other changes to the terms
and conditions of the membership or the Club Facilities which are available for use
by members. In the event this Membership Plan or any particular membership is
terminated without cause or the operation of all, or substantially all, of the Club
Facilities is discontinued, the affected members will be refunded one hundred
percent (100%) of the Membership Deposit previously paid, without interest.
[Ex. O3 at 19 (emphasis added).]
Even if the right-to-purchase language in the Membership Plan were binding under
Tennessee law, the Court finds that in the context of a bankruptcy case, a right of first refusal is
unenforceable because “it does somewhat restrict or condition the assignment of a contract . . .
[and is] unenforceable under [11 U.S.C. §] 365(f).” In re Genesis Healthcare, Inc., No. 25-
80185-SGJ-11, 2026 WL 2065679, at *12 (Bankr. N.D. Tex. July 14, 2026) (noting that such
rights “could chill bidding and interfere with a trustee’s . . . efforts to maximize value for an
estate”).
Section 	365(f) 	renders 	unenforceable 	not 	only 	provisions 	which 	prohibit
assignment outright, but also . . . provisions that are so restrictive that they
constitute de facto anti-assignment provisions. Among the types of provisions that
have been held to be unenforceable under section 365(f) are rights of first refusal,
and for good reason. They always “restrict” assignment—one of the three types of
scenarios that result in invalidation under section 365(f). And in many (though not
all) circumstances, rights of first refusal will do so in a fashion that materially
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impairs the estate’s ability to maximize value for its creditors when it markets its
assets, which often consist of (partly or entirely) executory contracts.
In re Adelphia Commc’ns Corp., 359 B.R. 65, 85-86 (Bankr. S.D.N.Y. 2007) (citation modified).
Citing and following the rationale of In re Adelphia Communications and In re Mr.
Grocer, Inc., 77 B.R. 349, 355 (Bankr. D.N.H. 1987), the Genesis Healthcare court recognized
that there are “practical and policy concerns raised by enforcing rights of first refusal in
bankruptcy.” 2026 WL 2065679, at *12-13. The court focused on the facts before it, many of
which are similar to the facts here, such as a sale process that took place over several weeks, the
bidders were interested in the entire enterprise rather than piecemealing, there was an
opportunity for the party with the right of first refusal to participate in the auction, and after the
sale hearing, the court determined that the purchaser had the financial resources and could
provide adequate assurance of future performance as the new owner. Id. at *13. As in that case,
the Court finds that “enforcing the [right of purchase] in this situation would improperly restrict
an assumption of the assignment of [Debtor’s assets], contrary to the dictates of section 365(f) –
an assumption and assignment for which there is a sound business justification and that benefits
all concerned.” Id.
7. 	Rule 6006 Compliance
Finally, the Objecting Property Owners raise a hyper-technical objection concerning the
Trustee’s compliance with Rule 6006(f) because the Trustee noticed all of the members of his
intent to assume and assign their membership agreements in a single notice. Rule 6006(f)
provides that a motion to assume or assign multiple executory contracts “must be limited to no
more than 100 executory contracts.” The Trustee responded that his single notice to the more
than 600 members of the Club did not affect the members’ understanding of what the Trustee
proposed. He argues that compliance with the 100-limit of Rule 6006(f)(6) would have caused
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him to send seven separate assumption notices, which likely would have created more confusion
than the single alphabetized list that he sent.
First, the Court finds that the Objecting Property Owners lack standing to raise the issue
because their membership agreements are not being assumed or assigned and they have no
pending objection to the proposed assumption and assignment. Additionally, the Court approved
the form for the notice in the Sale Procedures Order after the hearing40 on June 25, 2026. [Doc.
1017 at ¶ 10 (approving the Notice of Assumption and Assignment Procedures).] Accordingly,
the Court finds that the Trustee substantially complied with the requirements of Rule 6006(f)(1)-
(4), especially given that the notice approved by the Sale Procedures Order was the result of
much discussion among the parties and the Court with no issues remaining after the June 25
hearing.
The Court also relies on Federal Rule of Bankruptcy Procedure 9005, incorporating
Federal Rule of Civil Procedure 61, which provides, in relevant part: “At every stage of the
proceeding, the court must disregard all errors and defects that do not affect any party’s
substantial rights.” See In re Norvergence, Inc., 405 B.R. 709, 763 (Bankr. D.N.J. 2009) (finding
that Rule 61 allowed the court to excuse the trustee’s failure to abide by the provisions of Rule
7004(b)(3) when the objecting party failed to show how it was prejudiced by deficient service of
the summons and complaint). Not many cases exist concerning the requirement of Rule
6006(f)(6), but in In re Old Carco LLC, 406 B.R. 180, 210 (Bankr. S.D.N.Y. 2009), the court
excused the Rule 6006(f)(6) limit given that all of the agreements were substantially similar and
were subject to a single comprehensive analysis by the debtors. The court also considered the
40 The transcript of the June 25 hearing also reflects that the parties – namely the Trustee and TCRB – discussed the
need for the assumption notice to contain clear deadlines to avoid confusion. No one raised the question of the Rule
6006(f)(6) limit.
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1983 Advisory Committee Notes that “deemed the objective and economical administration of
cases under the Bankruptcy Code which has frequently been recognized by the courts to be a
chief purpose of the bankruptcy laws.” Id. (citation modified). The Court ultimately concludes
as did the court in In re Old Carco that “it would not have advanced the process by requiring the
[Trustee] to file . . . separate motions requesting the same relief. Notice was timely and proper.”
Id.; see also In re TM Vill., Ltd., 598 B.R. 851, 856 (Bankr. N.D. Tex. 2019) (“Nothing in the
record suggests that the Debtor’s less than scrupulous compliance disserved the objectives of the
amended rule. First, the motion involves only one type of executory contract, all identified on
Exhibit A by unit number and a purchaser’s name. Second, the motion is straightforward . . . .”).
IV. CONCLUSION
For these reasons, the Court overrules the objections of the Objecting Property Owners
and RBCAI. The Court finds that the Sale should be approved under § 363(b) because the
Trustee’s decision to enter into and consummate the APA with Timbertop is a good-faith,
reasonable exercise of the Trustee’s business judgment and is in the best interests of the estate,
the creditors, and all other parties in interest. The Court finds that the Sale was negotiated at
arm’s length, without collusion, and in good faith.
The Sale will be approved by separate order as free and clear of interests, liens, claims,
and encumbrances, with all such liens, claims, encumbrances, and other interests attaching with
the same validity and priority to the Sale proceeds. In addition, each entity with a lien on the
Purchased Assets has consented to the Sale or is deemed to have consented to the Sale or
otherwise falls within the provisions of § 363(f)(1) through (5).
Finally, the Court finds that Timbertop has acted in good faith in relation to the Sale as
that term is used in § 363(m).
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In closing argument, the Objecting Property Owners asked the Court to disapprove the
Sale but, alternatively, if the Court approves the Sale, to (1) expressly find that the Sale does not
include any right to enforce any disputed mandatory membership and (2) include in the Sale
Approval Order an injunction against Timbertop attempting to exercise Declarant Rights until
further order of the Court. The Court will grant the alternative request for the Objecting Property
Owners and include an injunction against Timbertop enforcing the mandatory membership
requirements of the Sixth Amendment against the Objecting Property Owners until this or
another court of competent jurisdiction decides the dispute over the mandatory membership
provision in the Sixth Amendment. The Court will also enjoin Timbertop from attempting to
exercise Declarant Rights pending further order of this Court.
The Sale Approval Order, which is consistent with this opinion, was entered on October
6, 2026 [Doc. 1315].
FILED: October 13, 2026
BY THE COURT
s/ Suzanne H. Bauknight
SUZANNE H. BAUKNIGHT
UNITED STATES BANKRUPTCY JUDGE
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