Business

Attorneys again urge judge to OK sale of Cedars to lender

A judge is considering whether to order the sale of Cedars Lodge & Spa property, which has recently been winterized to protect it from the elements. A receiver testified in court last week that the condo tower is 55 percent complete and would cost $40 million to finish. [AMY B. MCCRAW/Hendersonville Lightning]

By Bill Moss, Published: September 30, 2026

A North Carolina Business Court judge is set to decide this week whether the stalled Cedars Lodge & Spa development in downtown Hendersonville will become the property of the main lender, which forced the project into receivership over the $36 million construction loan it made.

Fifty-four people watched a hearing Tuesday morning, held virtually, including attorneys for the Cedars, lenders, depositors, the general contractor, subcontractors who have filed mechanics liens in court, the city of Hendersonville, and others. Most of the non-attorneys watching were people who had made substantial deposits for a luxury condo, generally at least $100,000 and often more than $250,000, according to court records.

Judge A. Graham Shirley told the participants that he would take the matter under advisement and issue a ruling by Wednesday night.

William L. Esser IV, the attorney for the plaintiff in the case, lender Fuse 10 LLC, urged the judge to approve the that the lender has proposed.

"There are no parties who disagree that the property needs to be sold so it's just a question of how to sell it" — either via foreclosure or court-approved sale to Fuse for its "stalking horse" offer of $36 million, he said.

Fuse is covering the carrying cost of the land and building, including $10,000 a month for insurance, while the Cedars is piling up interest debt of $650,000 a month. Fuse has said in court records that the borrower has been in default since last Dec. 31.

"If we were to go into foreclosure, there are rights to enjoin the sale," Esser added, but only if the party seeking to block the sale puts up a large bond. "If you want more time, pay up, just the same way as you woud pay up to get an injunction for a foreclosure."

Cedars attorney Paul Fanning urged the court to pause the sale process while the developer pursue a new finance arrangement. Gregg Covin, the Miami developer leading the project and son-in-law of Cedars owners Fran and Tom Shipman, was watching the hearing but did not speak.

"The defendants have proposed a viable refinance project" involving a $60 million loan to restart construction, Fanning said. "There is no requirement that Fuse continue to fund construction. The plaintiffs have refused that refinance plan; that is certainly their right." The receiver's motion, he added, "is light on what is the fair value and it is light on what is the fair process."

Fanning added that the defendants had filed a "limited response to a purchaser's pleading" that he said had "inaccurately stated the factual sequence of events. We felt it was necessary to respond to those allegations ... to put that on the record."

Paul Capua, an attorney representing 23 condo purchasers, said many of the depositors had invested their life savings in the purchase, "are financially devastated as a result of it" and deserve a full opportunity to argue for compensation in any sale of the property.

"We are not seeking to scuttle the sale process, we are not seeking to increase the carrying cost," he said. "We are simply objecting to the condition (of the proposed sale) that would extinguish all of the interested parties' rights to this property."

Fuse and the receiver have argued that the only way to make a sale viable and to protect Fuse's interest is to remove all other claimants. 

Judge Shirley read from the purchase agreement a key paragraph that says any claim purchasers were to make would be subordinate to the lender's position as the first-priority lien holder. While Esser said several depositors had rescinded their purchase agreement, the judge questioned whether they had that right under state law.

Anna Gorman, attorney for receiver Liberty Solutions, said Fuse's $36 million offer "is likely the best offer" although there had been some prospects for a sale to other investors.

Brian Gribble, Liberty Solutions' manager, said some investors who had expressed "very serious interest" had brought a team of contractors to evaluate the half-finished six-story residential tower.

"Getting their arms around a firm cost to complete is what we're seeing folks doing," he said, adding that the firm marketing the project is at a national lodging conference in Las Vegas this week where it could seek prospects. 

An attorney for EB5 investors — a federal program under which foreign investors can fund construction in exchange for a U.S. visa — said his clients viewed the sale to Fuse as a better option than foreclosure. 

EARLIER COVERAGE:

The fate of the stalled Cedars development in downtown Hendersonville may rest on whether a buyer can be found to finish the luxury condo project — and soon.

The alternative could be foreclosure on the land and the half-completed condo tower.

Those options came forward last week during a hearing in North Carolina Special Business Court before Judge A. Graham Shirley on the next steps for the project, which has sat idle for almost a year. Shirley in June granted a motion by the lender, Fort Lauderdale, Fla.-based Fuse 10, to force the property into receivership in an effort to salvage the building.

The hearing on Sept. 22 was the first time some of the 65 or so depositors got to speak. Several told the judge that they had sunk their live savings into the luxury condos and now were left with uncertainty about what happened to the money and whether they’ll ever live in the development. So far, the news is discouraging. The lender’s attorney told the judge that the condo buyers have no guaranteed refund option under the law because Fuse, the lien holder, is first in line.

Three different attorneys representing condo buyers appeared at the hearing, which was held virtually last Tuesday, and asked the judge to delay a possible sale so their clients could be heard. The receiver and Fuse both argued strongly that the property should be put on the market immediately, as huge carrying costs are accruing by the day.

Anna Gorman, representing the receiver, told the judge that developer Gregg Covin and the Shipman family conceived the project as a high-end residential hotel complex consisting of two 65-unit buildings.

Appointed on June 25, the receiver has evaluated the property, inventoried the equipment and construction supplies on site and off-site and estimated the cost of completion.

Fuse 10 LLC, provided a $36 million construction loan for the project, secured with a first priority lien, Gorman said.

“We understand it’s accruing interest at a rate of over $21,000 a day,” Gorman said, adding that interest accrual totals about $650,000 a month, at a default interest rate of 25%.

She said Brian Gribble, the receiver, was notified on Aug. 18 “that all refinancing possibilities have fallen through, and very soon afterwards, he spent considerable time at the project so as to understand the status of the project, to evaluate the situation, and to begin to evaluate or make a plan.”

Tower is 55% complete

Gribble, manager of Liberty Solutions, the court-appointed receiver, said the initial construction estimate was $68 million for the first seven-story building, called the Pisgah Tower.

“We have had our internal construction group, as well as a third party, determine just from a high level a percentage of completion, which has been agreed to be about 55% complete,” Gribble told the judge. The team estimated that it would cost $40 million to complete the building.

The receiver ordered some repairs mostly related to erosion control, he said, and had just completed the securing the tower. A contractor completed the enclosure of all the exterior openings to protect it from the elements, installed no-trespassing signs and completed an authority-to-act application giving Hendersonville police “the proper authority to address any trespassing that may occur,” Gribble said.

Liberty has signed a national hospitality group marketing company to list the property.

“They are just wrapping up what we call pre-marketing period,” he said. “They’ve had several site visits and had some pictures taken” and are completing a virtual presentation that will go out to prospective purchasers.

He added that on Oct. 5-8, the sales team will be attending a national lodging conference in Phoenix, Arizona, where real estate, financing, contractors, owners and investors worldwide “meet and collaborate.”

$36 million ‘stalking horse’ offer

 William L. Esser IV, Fuse’s attorney, said sale of the property is an urgent matter.

“It was going to be a beautiful complex, very high-end, luxurious condominiums in beautiful Hendersonville with a hotel, a historic hotel element, spa elements,” he said. “It really appeared to have the perspective of being just an amazing project in that area.

“Clearly something went wrong during this construction process, and now we are very aware that there’s this mess that needs to be cleaned up. … The project needs to be completed, and the only way we believe to move forward is to strip the debt off the collateral so that another contractor can come in and finish it. In other words, a complete reset, such that the project has a clear title.”

Fuse and the receiver have worked out, subject to court approval, a public sale in which Fuse would make a $36 million “stalking horse” offer that they hope would be topped by a buyer.

“What that means is that Fuse has agreed to purchase the property with a credit bid of $36 million, subject to higher and better bids,” Esser said.

In response to the Lightning's request for comment, Cedars owner Tom Shipman said: "We are working with a new lender and trying to work out all the details."

Cedars attorney Paul A. Fanning urged the judge to give the developer and landowner more time to secure a refinancing deal. He emphasized that the developer and the Shipmans had been “totally cooperative with the receiver.”

“Anything that the receiver has asked for, our clients have provided, and continue to cooperate with both the receiver and with Fuse, with the exception of filing this objection” to the sale, he said.  “It’s really about whether a project that could generate $170 million in proceeds should be liquidated through a shortened sale process. We submit that there’s a better path.”

Esser strongly objected to a proposal the Cedars Lodge & Spa has floated for new financing.

“I mean, he’s basically asking us to double down and (be) in a worse lien position for the hope that maybe at the end of the day, if this debtor that couldn’t get things done over four years, all of a sudden things are going to change and we’re going to get it done,” he said. “No, thank you, your Honor. There is no world in which we’re going forward with that. This debtor is done, cannot get financing. There is no path forward there, and Fuse will not participate in any path with this debtor on financing going forward.”

Depositors speak

Other claims against the property besides Fuse include Cedars Lodge & Spa EB5 Funding LLC, which is owed $8.8 million; another EB5 group, which loaned $2.7 million, general contractor Turner Construction, which says it is owed $7 million, and 65 to 80 condo buyers, who attorneys say paid a total of $18 million in deposits.

EB5 is a federal construction loan program in which foreign investors seeking visas to the U.S. can invest money in projects that generate jobs.

“For many of us, this is not simply an investment,” an EB5 investor identified as Manuel told the judge. “We invested a substantial amount of our personal savings because we believe in this project, and more importantly, because we believe in building our future here in the United States. We followed the process, committed our money, and took a significant risk because we wanted the opportunity to become part of this country, contribute to the economy and build our lives here.”

Judge Shirley also heard from several condo buyers.

“I visited the property twice, once early on and once later. The later visit was most recently, and it looked like a war zone,” said buyer Carl Raab, 83. “I received very little information, although I requested it time and time again, about the progress of the building and what was happening.”

He and others urged the court to find out what happened to the depositors’ money.

“I think it’s important that we, as buyers, are recognized,” Raab said. “Eighteen million dollars is a lot of money, and I don’t think the money was handled properly.”

Jack Bragan, a condo buyer from South Florida, also urged the judge to take the depositors’ situation into account.

“We have 65 minimum, upwards of possibly 80 individuals, many of modest means like myself, who put up my entire 401k savings on a lifelong dream when I retired recently at 60 years old to come live in this area,” he said. “And I’m just hoping that as the case unfolds that we think about not just the interests of the secured parties, but all these other families that have been so dramatically and adversely affected.”

Buyer Hiren Patel, a geriatrician in Asheville, said: “My prayer and hope is that this can be salvaged. Just like (other investors), I have invested all my life savings, and as a primary care physician and geriatrician, that’s a lot of hard work gone into nothing.”

John Turchin, the Horse Shoe farm owner who is also a developer, told the judge he is trying to put together an equity ownership group to salvage the project. Turchin was also a condo buyer.

In closing remarks, Judge Shirley said that ought to be pursued quickly.

“To the extent someone’s trying to get together an equity group and needs to speak with the receiver, I would encourage you to do that sooner rather than later,” he said.

If the property is sold, he added, how the proceeds are disbursed is “really not in my discretion,” he said. “It’s going to be that the law requires certain things, and I will follow the law.”

The judge set another hearing for Oct. 6.