Receiver for Cove Condominiums discharged after reaching settlement
ELKHORN — Cove Condominiums is no longer in receivership and is being governed by a newly elected board of directors.
Walworth County Judge John Race on Tuesday discharged the Cove's receiver, attorney Michael Polsky. The board now has governing rights, and is in charge of operations and finances.
Unit owners are excited to move forward after more than a year of watching attorneys figure out how the Cove found itself in financial trouble, said Jim Patrician, unit-owner and board member.
"This is a great day for the Cove," Patrician said. "It has been over a year in the making, and we have a high level of confidence that we have restored our position as a viable resort in Lake Geneva."
The 223-unit, four story condominium hotel, 111 Center St., Lake Geneva, was placed in receivership Sept. 27, 2012, because of questions regarding unpaid bills, mortgage payments and placement funds. Among the unpaid bills was $1.9 million loan from PNC Bank that was in default despite payments made by condominium owners to the condo's association.
In August, unit owners voted in favor of a settlement with PNC to pay the bank $1.1 million before Sept. 1, 2014, according to court documents.
In an October hearing, Race granted the order for a settlement.
David Pelletier, attorney for the association, was not able to comment on the settlement agreements and could only say he thinks it is a fair agreement that received a nearly unanimous vote.
During the hearing, Polsky and Race both said they believed the case would have ended up in bankruptcy court.
"Certainly the efforts made by the receiver have rescued this condominium and business," Race said.
While Race discharged Polsky as receiver, he is allowing Polsky to retain the authority to hold Chandra Webster, chief financial officer of the Cove's former management company, in contempt of court.
Webster is being held in contempt for failing to comply with a court order to turn over all funds and records to Polsky in January.
Webster was scheduled to have a hearing Tuesday, but her lawyer was out of the country. The hearing is scheduled for Friday, Dec. 27.