The auction to control Hamley businesses turned into a no-ride. For the time being.
The Hamley western store, cafe and steakhouse are fixtures of Pendleton’s downtown. Hamley owners Parley Pearce and Blair Woodfield are battling each other in court over the future of the businesses.
HIPO, an Idaho limited-liability company, bought about $1.4 million of Hamley debt earlier this year and planned to auction the memberships that control the business entities Monday in Portland to recoup that expense. But Woodfield on Friday filed for bankruptcy protection, effectively blocking the sale.
“I needed to stop the sale because of the need to protect my interests, so I filed Chapter 11 reorganization,” he said, “and it’s a personal Chapter 11 reorganization.”
Woodfield on his filing lists the HIPO debt, $1.5 million to Banner Bank and almost $3.7 million to the United States Department of Agriculture Rural Development, which provided the loan for the Hamley steakhouse more than a decade ago. Woodfield said he and Pearce personally guaranteed the debts and owe them jointly and separately.
“The Chapter 11 is the separation of our partnership,” Woodfield said. “That’s all it is.”
Woodfield said he planned on going to the auction and bidding but chose bankruptcy protection when he realized the auction was a “rigged sale,” although a legal one.
Pearce found HIPO to buy the debt, Woodfield claims, and its attorney was in charge of the auction. HIPO on the notice of sale — which ran in the East Oregonian — reserved the right to cancel the sale at any time and even refuse the highest bid. HIPO also gave no guarantees about what it was selling.
The only parties who could make the sale work were Pearce and HIPO, Woodfield said, so he warned people he knew to stay away.
Pearce said he made plans to go to Portland and “bid long and hard if need be,” then Friday afternoon found out about Woodfield’s bankruptcy.
“We don’t know what will happen as far as how long this might postpone things,” he said. “But I’m amazed. I’m actually amazed at a lot of things about it.”
Such as Woodfield’s credit card debt exceeding $60,000. Pearce said that is indicative of Woodfield’s “bad financial judgment.” Woodfield said he was current on every one of those bills.
Pearce also said the Hamley company agreements state a personal bankruptcy removes a partner’s membership, so Woodfield loses his voting and management rights. Pearce was hopeful the delay would last no more than a month or two.
The civil case over all things Hamley goes to trial July 23-26. Umatilla County Circuit Judge Lynn Hampton last week ruled against Woodfield’s request for an independent receiver to control the businesses. Hampton in a three-page opinion found the receiver “would impose considerable further financial burden and expenses upon the businesses” at a cost of “$300 per hour for the work of the principals and $125 per hour for their associates,” plus professional fees. She also stated a receiver would not prevent the auction of the business memberships.
Taking all of that and more under consideration, Hampton denied the appointment of a receiver.
“We don’t agree with the ruling, necessarily,” Woodfield said. “Which is fine. I think we’re in a better place right now.”
The bankruptcy court, he said, likely has the authority to end the business partnership with Pearce and force the sales of Hamley assets to pay off the debts he and Pearce share.