Lease error a snag in Delaware Sports Complex bankruptcy


MIDDLETOWN — The Town of Middletown errantly included an unrelated public park it owns in a land lease agreement with Delaware Sports Complex, LLC which filed for bankruptcy this week after accumulating nearly $1.6 million in debt claims, officials confirmed Thursday.

While sports complex ownership touted plans to build a $13 million facility on a 170-acre tract, its 99-year lease with the town listed 319.69 acres that included the Charles F. Price Memorial Park next to the facility as well.

According to Mayor Kenneth Branner Jr., the agreement included “size of the entire parcel. The lease was based on the areas of the plan we spray on and not the entire complex.”

The lease, which became effective on Feb. 24, 2016, charged the DSC $1 per year. Mr. Branner signed documents for the town, while then owners Brian Ellis, Scott Lobdell and Matt Richter signed for the DSC.

On March 17, the Town of Middletown filed an eviction claim against the business in Justice of the Peace Court alleging the DSC had failed to meet terms of the agreement.

According to DSC owner and manager Dan Watson of Easton, Maryland, the disputed land lease agreement “will be resolved early in Chapter 11 (bankruptcy) proceedings.”

On Thursday, Mr. Watson stressed that a Chapter 11 bankruptcy allows the DSC to continue operations while forming a reorganization plan.

Mr. Watson noted that he was not involved in original lease negotiations and didn’t know “of the alleged mistake when he acquired his interests in the (DSC).”

In court papers, the DSC described the town’s default claims on the lease as “groundless” and described the municipality as “Apparently unhappy wit the progress of the (DSC’s) development of the property …”

Since taking over the DSC on March 1, Mr. Watson — the former father-in-law of ex-owner Mr. Ellis — said he’s been unsuccessful in discussing the matter with town officials.

“I’m frustrated that I have some capability to straighten this out but have not been able to have any meaningful conversations with the town regarding the lease,” Mr. Watson said.

“They have their opinion and seem to be sticking with it, and it’s a different opinion than I have.”

The complex is located at 955 Levels Road near U.S. 301 in west Middletown near the Maryland-Delaware state line.

A viable idea

In its federal bankruptcy filing for reorganization on Tuesday, the DSC listed a debt claim by the Town of Middletown for $190,000 (spent on infrastructure), among 13 creditors.

When learning of the bankruptcy on Wednesday, Mr. Branner described himself as in “total shock” initially, followed by “disappointment” in the course of the complex.

Describing himself as “an experienced and successful real estate investor and entrepreneur,” Mr. Watson said he believes the project can still move forward “and has the potential to become one of the most successful sports complexes in the country.”

The new DSC owner said he agreed with earlier comments made by Mr. Branner regarding the viability of a sports complex and its strong potential.

“I believe what the mayor believes — that this is a sound idea to put a sports complex at that location,” he said.

“I think it makes a lot of sense.”

Mr. Watson likes what he described as Middletown’s central location in the U.S. 95 corridor between Boston and Richmond.

“The property is large enough to accommodate almost unlimited facilities, and Middletown offers well-established infrastructure such as restaurants and hotels that could support large tournament competitions immediately,” he said.

“And we look forward to providing the best possible community athletic fields for Middletown kids as well. If a large sports complex can succeed anywhere in America, it surely can succeed here.”

In the interim, however, Mr. Watson is seeking approval to borrow up to $278,750 during the bankruptcy process to continue operations. He said any loan would come from his personal funds and mostly cover legal fees and upkeep of the playing fields. Recently, Mr. Watson said, he paid to aerate and fertilize the fields.

Weeds at the facility had grown hip high or taller recently, with trash and broken pipes strewn around, and Mr. Watson said, “the property is somewhat untended and in need of attention.”

Mr. Watson believes that he can eventually move the project forward and that would most benefit the entities claiming debts owed.

“The reorganization plan will focus on putting this project in the right frame so creditors and stakeholders are able to be paid, though there’s no assurance of that since it all depends on how the lease question is answered.”

Money claims

Nichols Nursery of Newark claims that it is owed $811,337 by DSC, according to documents, while Van Cleef Engineers of Hillsborough, New Jersey has a claim for $205,483. Attempts to reach both companies for comment earlier this month were unsuccessful.

Other Middletown-based entities with money claims include MDR Golf of Middletown ($105,550 for services) and the Delaware Revolution Soccer Club ($36,000 for equipment). Matt Richter is listed as MDR’s creditor, with Blaine Boyles representing the Revolution.

Also owed for services are Saul Ewing LLP of Wilmington ($19,777, James Taylor), B&B High Tech Solutions of West Berlin, New Jersey ($8,430, Jeff Evans), Landscape Architectural Services of Dover ($7,000, Matt Spong) and Northern Tier Landscaping of Wilmington ($3,000 Matt Laudemean).

A $13,000 loan from Liborio Watergate LLC and Lou Ramunno is also due.

Original owners Mr. Ellis of Middletown and Mr. Lobdell have promissory note claims of $71,900 and $30,778, respectively. Also, Mr. Lobdell’s Summitt Bridge Property is seeking $54,995, according to the Chapter 11 filing.

A $15,000 retainer is listed for Hiller Law LLC of Wilmington, which filed the bankruptcy petition

Currently, the DSC “has virtually no cash on hand,” according to court papers.

Until the lease dilemma is litigated, Mr. Watson said he can’t organize any upcoming events or enter into agreements at the complex based on its uncertain longevity.

“The possible termination of the lease is a cloud hanging over the complex right now,” he said.

The Delaware Revolution Soccer Club currently rents the facility for practices and games, according to Mr. Watson.

The town approved a site plan for the DSC in August 2015 and consented for construction on the land to begin on Sept. 29, 2015, according to court documents. Six full-sized soccer fields were built to begin operations, a DSC filing read. The town recently removed a DSC-owned sign next to the complex promoting a spring 2016 opening and stored it in a shed.

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