Under the lease, Kahn and South Bay were obligated to pay $2.6 million up front in exchange for the assignment and assumption of the lease, but no later than April 19. Of that money, $2 million was to be put in a repair fund that Kahn could draw from to make the necessary improvements to the club. Shulman, as the landlord, retained the right to approve those expenditures and the people who were to make the repairs. Court papers show that Kahn failed to honor the obligation, instead, negotiating an extension, getting until April 20. It once again failed to honor that payment, court documents show. The obligation was extended to July 9. Papers say, South Bay breached the agreement.
On Aug. 26, Berman presented another motion to the court, based on a letter by Kyle Seaman, who had been the assistant golf pro at the Oceanside course. The letter reported that all the chemicals necessary to take care of the golf course were repossessed, both the water and power companies have sent disconnect notices, several key suppliers have closed or suspended the club’s accounts because of non-payment, the clubs bathrooms are overflowing with feces and urine on the floor, garbage and has not been picked up for months and members refuse to come because of the unsanitary conditions.
Kahn refutes the claims saying needed repairs have been made. “We fixed the irrigation and we fixed the pumps. The people who are saying that I didn’t do what I’m supposed to have a beef with me personally. It is nothing but sour grapes. They want us to look bad, but we’re the ones who came to the rescue of the club. We went into default by one day — one day late and they took us to court,” he said.
According to the letter, employees had not been paid for weeks and the club had been run as a cash business without keeping a record of the money taken in.
Shulman has asked to court to allow the Chapter Seven trustee, Kenneth Kirschenbaum to take over the repair process from Kahn and make the necessary emergency repairs to keep the club going until Kahn is relieved of the lease.
Berman said that the next court date was set for Sept. 23.