Monthly Archives: April 2019

Voting Results for GOMO Chapter 11 Plan

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To the right are the tallied results from GOMO’s recent bankruptcy plan vote which ended April 1, 2019.  The Class 5 results are believed to be the most significant and sure to have the greatest influence on the bankruptcy court judge based on his prior comments during public hearings, and because Class 5 reflects the interests of those residing within and maintaining a continued stake in the future of Garden Oaks.  Note that Class 5 includes homeowners who are a mixture of both non-creditors and creditors.

The Class 5 vote was effectively split, 50/50, and consequently the GOMO Board chose not to seek confirmation of the plan by the bankruptcy judge.  A primary goal of exiting bankruptcy has been to bring resolution and closure to the neighborhood in regards to its HOA, and seeking confirmation of this plan in light of split results would have done the opposite, only serving to incite further discord.

Despite being a split vote, some useful insight into homeowners’ priorities was gained.  Multiple ballots were returned with supplemental text stating the voter would have affirmatively voted for the plan if not for the inclusion of the $80 annual fee.  Neighbors, particularly those who have already paid a fee, clearly do not wish to pay another nor is there much appetite for the annual assessment.  Many Class 3 creditors are also homeowners voting in Class 5, and through their votes it was made clear that receiving maximum value of any monies to be returned to creditors was a priority.  Although we believe that updated Deed Restrictions with a reasonable amendment method to facilitate future revisions are integral to the future success of the HOA, clearly this was not as highly prioritized as: 1) Maximize monies returned to Creditors and 2) Minimize monies that must be paid out by Homeowners in the future.

What now?  Without a confirmed plan, GOMO remains in bankruptcy.  More cost, more pain, but hopefully a better plan will emerge which may unify and receive full backing from the neighborhood.  Representatives of GOMO and the Creditor Committee met during the voting period, and both groups’ attorneys continue to be in discussion about ways to move forward, hopefully with a unified plan.  The next bankruptcy court hearing is set for May 9, 2019, although there is a possibility it could be earlier if GOMO and the Creditor Committee reach an agreement on a jointly acceptable plan.

AffirmReject
Class 1 (Creditors)01
Class 2 (Creditors)02
Class 3 (Creditors; mix of both non-homeowners and homeowners)3784
Class 4 (Creditors who wish to refund their monies to new HOA)201
Class 5-Section 1 (Homeowners; Mix of non-Creditors and Creditors)7463
Class 5-Section 2 (Homeowners; Mix of non-Creditors and Creditors)3026
Class 5-Section 3 (Homeowners; Mix of non-Creditors and Creditors)5249
Class 5-Section 5 (Homeowners; Mix of non-Creditors and Creditors)3448
Total Class 5190186

Revised GOMO Bankruptcy Plan

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Revised Bankruptcy Plan:

GOMO has revised its plan which will be the basis for its starting point in a joint negotiation with the Creditor Committee or possibly a separate plan to be resubmitted and voted upon by the neighborhood.  These are general principles and subject to revision after potential negotiations with the Creditor Committee.

  • A flat, simple Transfer fee of $1500.
    This will be assessed on future, and not current, property owners and will include a reasonable adjustment mechanism so it may be lowered or raised based on future needs of the neighborhood.  Discontinue the current 0.75% assessment of sold property metric which is the basis of the current transfer fee.  Abandon the prior contemplated $80 annual fee proposal.  Current property owners will not pay any fees.  The judge was adamant that GOMO include a mandatory annual fee in its earlier plan.  However, with the voting results in hand, we are comfortable standing up to the judge and recommending a transfer fee on future property owners be maintained, but significantly lowered, and improve the method so as to address the concerns of residents regarding ability to adjust in the future.
  • Maximize money returned to Creditors.

After attorney’s fees are paid, post-petition fees returned, and 1 year reserve of operating expenses for future HOA are set aside,100% of remaining funds will be returned to creditors.  It is our objective to ensure our plan maximizes the funds returned to creditors.

  • Updated Deed Restrictions and Bylaws.

Neighbors, we need these updates.  Some of the current restrictions are untenable and must be revised/updated.  On this point there is very little disagreement. There must be a reasonable amendment process, sorely lacking in the current DRs, to allow the DRs to evolve moving forward.  Had a workable and reasonable amendment mechanism been in place, the neighborhood could have easily voted years ago whether it wanted to amend or remove certain restrictions that weren’t equitably established and enforced through all sections of GO. The existing method requiring an affirmative vote of 67% of all neighbors is too high a threshold and a difficult task which is why the DRs have not been updated.  The GOMO Board strongly advocates capitalizing on this opportunity to update and revise our DRs and bylaws under the protection of and as part of the bankruptcy case to more easily ensure and facilitate a timely passage.

  • Fix GOMO Formation Defect.
  • GOMO leadership resigns upon plan confirmation.

The new HOA Board elected after bankruptcy is completed will consider the benefits of 3rdparty professional management for Deed Restriction enforcement.  It is the GOMO Board’s belief that ensuring a professional, objective process for DR enforcement would allow the neighborhood to move forward with greater confidence, but feedback at prior Townhalls and the voting results suggest this is not the most pressing priority for the neighborhood.