Stay sought in Conneaut Lake bankruptcy

Jan. 22--Three taxing authorities in Crawford County have been waiting for years to collect hundreds of thousands of dollars in back taxes from the bankrupt Conneaut Lake Park.

The authorities might have to wait even longer.

As part of an appeal in the bankruptcy case, another entity wants a judge to freeze a release of the disputed funds -- $478,000 from a $611,000 insurance settlement.

Park Restoration LLC wants Chief U.S. Bankruptcy Judge Jeffrey Deller to hold off on any disbursement until a resolution of Park Restoration's appeal over the money.

Park Restoration and its lawyer, John Mizner, are challenging Deller's Nov. 30 ruling that directed the $478,000 go to Crawford County, Summit Township and Conneaut School District. Deller awarded Park Restoration only $133,000 of the proceeds from the $611,000 settlement.

In a filing Wednesday, Mizner argued that a failure to stay the release of the $478,000 until after the appeal would create "irreparable injury."

If Park Restoration wins on appeal, and the money already has been released to the taxing authorities, "it would be impossible for PR (Park Restoration) to have immediate access to the insurance proceeds," Mizner wrote.

Deller set a Feb. 9 hearing on the stay request. The taxing authorities have until Feb. 8 to respond.

The lawyer for the taxing authorities, Larry Bolla, asked Deller on Jan. 8 to release the money. In the case of a stay, Bolla wants Park Restoration to post a surety bond in excess of the insurance proceeds.

Mizner filed the underlying appeal Jan. 7. He is arguing Park Restoration is entitled to the $478,000. The money, plus the rest of the $611,000 settlement, is in an interest-bearing account with U.S. Bankruptcy Court.

Giving the money to the taxing authorities, Mizner is arguing, would violate the Fifth Amendment prohibition against the government taking private property for public use without just compensation.

Park Restoration had operated Conneaut Lake Park's Beach Club. The $611,000 settlement was over a fire that destroyed the Beach Club in 2013.

The taxing authorities want to use the total payout of $478,000 to partially satisfy more than $927,000 in back real estate taxes.

The delinquency was one of Conneaut Lake Park's main liabilities when the amusement park filed for Chapter 11 in U.S. Bankruptcy Court in Erie in December 2014. The park remains in business.

The bankruptcy case is in mediation, which Deller ordered Nov. 30.

ED PALATTELLA can be reached at 870-1813 or by e-mail. Follow him on Twitter at twitter.com/ETNpalattella.

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