Gillioz scheduled for trustee's sale

A crown jewel of downtown Springfield’s entertainment scene is scheduled to hit the auction block this week.

Known as the Netters-Gillioz building, 325 Park Central East, the facility that houses the Gillioz Theatre is slated to be sold at 2 p.m. Nov. 15 on the southern steps of the historic Greene County Courthouse.

Philip Rothschild, director of the entertainment management program at Missouri State University and board president of the nonprofit Springfield Landmarks Preservation Trust that owns the building, said Guaranty Bank had elected to call the mortgage due on the property.

“We are currently in talks with Guaranty Bank and cannot comment at this time about ongoing negotiations, or what led to this decision. As a board, we are confident we will come to an agreement that will satisfy all parties,” Rothschild said via email. “The Gillioz Theatre continues to do business as usual.”

The trust filed for Chapter 11 bankruptcy reorganization in December 2010 – avoiding foreclosure on the property by Guaranty Bank, which held a $3.5 million debt against the property – after a failed attempt to receive historic state tax credits complicated the theater’s financial standing. That case was closed April 3, according to court records.

According to legal-notices publication The Daily Events, the scheduled foreclosure was prompted by a default on a $4.3 million loan that originated in April 2006.

Guaranty Bank President and CEO Shaun Burke declined to comment, citing the bank’s confidentiality policy.

Gary Bishop, an attorney with Mann, Walter, Bishop & Sherman PC in Springfield, is the successor trustee representing Guaranty in the sale. He did not return a call for comment by press time.

While the building’s foreclosure sale is pending, an event management firm appointed in October 2012 has concluded its obligations in the one-year contract, Rothschild said. English Management partner Paul Sundy did not return multiple requests for comment.

A volunteer-led governing group dubbed Gillioz Restoration Partnership LP directs the Springfield Landmarks Preservation Trust. In June 2012, Gillioz Restoration board member Bill Dunton, a partner with Abacus CPAs LLC, said the board made each of its roughly $13,000 monthly debt service payments to Guaranty Bank since the court approved a 25-year repayment plan in February 2011.

Dunton, who was out of town on business, declined to comment on this story through an assistant at Abacus CPAs.

Springfield bankruptcy attorney Dave Wieland of Wieland & Condry LLC said the circumstances surrounding the foreclosure are unusual because the deed is listed as a leasehold deed of trust. Wieland, who earlier this year served as trustee in the foreclosure sale of the 200-acre Jamestown development in Rogersville, said mortgages on leases are rare. In this case, Gillioz Restoration Partnership is listed as the “sublesee/borrower” and Springfield Landmarks Preservation Trust is the “lessor,” aka landlord. Netters-Gillioz Inc. is listed as the “lessee/sublessor,” aka tenant.

Wieland said both the tenant and the landlord have the right to mortgage the lease, but it’s not clear from the announcement which party is mortgaging the lease.

“Let’s say I have a long-term lease on a piece of property, I can mortgage that lease, just like I can mortgage any other piece of property I own. They are usually not worth much because your lease – unless you are prepaying, which no one ever does – is only as good as your ability to make monthly payments,” Wieland said.   

He said roughly 90 percent of lenders who foreclose on a property end up buying the property back, making it likely that Guaranty would be the next owner should the sale occur. “They’ve already got money in it,” he said, adding the bank can bid up to the amount owed without having to actually shell out cash.

Last year, Rothschild and Dunton said the theater was making a turnaround under the guidance of Managing Director Michael Owens, who left the theater in 2012 for a job in Tulsa, Okla. Gillioz’s 2011 revenue was up 35 percent to $910,000 and good enough to the put the theater roughly $100,000 in the black.

According to Gillioz.org, the theater has 12 shows scheduled after Nov. 15, including acts such as comedian Drew Carey on Dec. 13, punk rockers Dropkick Murphys on Feb. 25 and folk singer Arlo Guthrie on March 30. Rothschild said the show schedule shouldn’t be impacted.

“The board is very optimistic an arrangement will be reached with Guaranty prior to Nov. 15 that will allow the Gillioz Theatre to continue providing programming for our community,” Rothschild said.

The nonprofit owner of the theater is one of four organizations that have received a portion of a 1998 voter-approved increase to the city’s hotel-motel tax to help fund capital improvements, according to Cora Scott, the city’s director of public information and civic engagement.

“The ballot language specified that 1/4 cent of the increase would be split equally between the Gillioz, Landers, Dickerson Park Zoo and Discovery Center. All of these organizations, except Discovery Center, elected to use their share of the tax to repay bonds that were issued to pay for capital projects for their organization,” Scott said in an email. “The bonds were issued in 1998, and since that time, the hotel-motel tax designated for the Gillioz has been used to repay the bonds.”

Scott said the theater has received $268,000 in tax funds and the outstanding balance on the Gillioz’s bonds is roughly $250,000.

The ornate theater, which was originally built in 1926 by Monett businessman M.E. Gillioz for $300,000 but had ceased hosting performances by 1980, reopened in October 2006 following a $10 million, 15-year rehabilitation, according to Springfield Business Journal archives.

“That’s a neat Springfield structure. There’s a lot of history there and I hate seeing that thing go down or have financial troubles, but when I found out there was $4 million borrowed against it, I thought, ‘Oh man, that’s a lot of money,’” Wieland said. “I don’t care what your interest rate is, that is a lot to try and pay back.”[[In-content Ad]]