The federal bankruptcy case involving the Garden Oaks Maintenance Organization (GOMO) took a small step toward resolution Tuesday, but remains far from settled.
GOMO’s Chapter 11 restructuring plan that includes amended bylaws and deed restrictions was reviewed by bankruptcy court judge David Jones, who set a continued hearing for Jan. 28. Jones also gave the go-ahead for GOMO to continue devising its plan and negotiate with the court-appointed committee of unsecured creditors, which comprises five Garden Oaks homeowners.
Now that GOMO’s period of exclusivity for devising a plan has expired, the creditors committee is free to file its own restructuring plan with the court. A continued point of contention is what to do with the more than $720,000 in assets that GOMO had as of Oct. 31, the end of the fiscal year.
GOMO president Vic Seghers said its restructuring plan calls for a total of $50,000 to be distributed to a list of claimants that exceeds 400 current and former homeowners. Creditors committee chairman Gary Ingram said many creditors want more than that.
Most of GOMO’s assets have been acquired through the collection of a transfer fee that is 0.75 percent of a home’s sale price. A 2016 state district court ruling in favor of Garden Oaks resident Peter Chang, a member of the creditors committee, revealed that GOMO had no authority to collect transfer fees because it violated the Texas Property Code while petitioning residents to include them in the deed restrictions.
Jones suspended the collection of transfer fees in August and instructed GOMO to replace them with mandatory annual fees. GOMO’s restructuring plan calls for a mandatory fee of $80 and the appointment a third-party management company to enforce deed restrictions, which would be selected by a new set of officers for the homeowners association.
At some point after Jan. 28, if GOMO and the creditors committee reach an agreement on a restructuring plan, it would need to be approved by a majority of Garden Oaks homeowners before taking effect. Jones instructed the two sides to create an information package with a distinguishable cover that would highlight the major points of change and be easily digestible for homeowners.
The judge asked that a warning of sorts be included: If Garden Oaks homeowners do not ultimately approve the changes, they could be subject to the existing deed restrictions that include a transfer fee.
“The whole thing about rises or falls on that,” Jones said of the neighborhood’s approval.