A prime chunk of real estate and a handful of auto dealerships in Cool Springs TN including Nissan of Cool Springs, Mazda of Cool Springs, Infiniti of Nashville, Subaru of Cool Springs and Car Universe Pre-Owned Superstore, are in receivership because the owner Dan Schmidt has defaulted on almost $30 million in loans.
Here is the story as reported by Turner Hutchens with the Nashville Business Journal with Kevin Kemper from American City Business Journals contributing:
“An Ohio businessman’s financial troubles have tossed the future of five Cool Springs auto dealerships into uncertainty.
The dealerships — Mazda of Cool Springs, Nissan of Cool Springs, Subaru of Cool Springs, Infiniti of Nashville and Car Universe Pre-Owned Superstore, all located in a cluster near the intersection of Bakers Bridge Road and Carothers Parkway — were voluntarily put into receivership in January by their owner Dan Schmidt. Brentwood businessman Michael Creque also owns a minority share in the dealerships.
In turn, Ohio-based KeyBank, which financed the five Tennessee dealerships and another in Denver, sued Schmidt in the same Columbus court on Feb. 18 to foreclose on the properties, arguing he had defaulted on almost $30 million in loans. A judge granted immediate foreclosure the same day.
“This is all collateral damage from the credit crisis,” Schmidt says.
Despite the legal wrangling, the dealerships remain open.
“I don’t foresee the stores closing down,” says Vince Caccese, manager of all five Middle Tennessee dealerships.
Schmidt says his automotive businesses are suffering because of the recession and declines in auto sales.
February vehicle sales fell to 9.1 million units nationwide, down from 9.5 million units in January and more than 40 percent below the year-ago pace, according to research by Autodata Corp.
Schmidt’s attorney, Stanley Shayne with the Columbus law firm Shayne Nichols LLC, says Schmidt placed the dealerships into receivership so they could remain open while an exit strategy was put in place.
“(Schmidt’s) goal was to save those jobs and the families that depend on those jobs,” Shayne says.
Schmidt says he employs about 250 people through his companies.
KeyBank, however, claims in court filings that Schmidt threatened to destroy the value of the dealerships by ending their franchise agreements with their respective automakers.
The bank accused Schmidt of attempting to extract a $1 million “broker’s fee” for Schmidt’s brother, who Schmidt claims had found a buyer for the dealerships. Schmidt was also trying to secure $700,000 in fees from the sale transaction for his attorney and possible business partners, according to the bank.
Shayne called the allegations erroneous. He says Schmidt intends to dispute the court’s foreclosure ruling so the receiver, Martin Management Services Inc., can complete its work.
Fred Standish, spokesman for Nissan and Infiniti, says that while in receivership, the dealerships will remain open for business. He says he cannot speculate on whether the dealerships might close temporarily if they change hands.
Infiniti Nashville is the brand’s only certified dealer in Middle Tennessee.
Other dealerships and businesses that Schmidt owns are not in litigation because they were not financed by KeyBank, Schmidt says.
A businessman with diverse interests, Schmidt has developed residential projects in Ohio and Florida, and owns car dealerships in several other states.
Schmidt also is dealing with legal challenges to his Cabana Cay luxury condominium project in the Florida panhandle. KeyBank and Charter One financed the $75 million, 613-unit development. The two banks filed a foreclosure lawsuit against Schmidt, his business partners and Cabana Cay Investments LLC in the 4th Judicial Circuit Court in Florida on Oct. 1.
The lawsuit alleged that Schmidt and his partners agreed to make two loan payments last year of $15 million and $40 million, but failed to do so. The lawsuit said Cabana Cay Investments owed $74.57 million, plus interest, as of September.”