A federal bankruptcy judge has determined that the Whitewater Amphitheater in Central Texas cannot be auctioned off free and clear of contentious deed covenants, a legal determination that could significantly depress the final sale price of the popular New Braunfels live music venue when it goes to the auction block later this month.
In a comprehensive 27-page written opinion released over the weekend, U.S. Bankruptcy Judge Aubrey Thomas rejected a formal request filed by the venue’s ownership entity, Kona Coast Venture Ltd. The debtor had asked the court for authorization to strip the property of its existing land-use covenants prior to a bankruptcy auction, arguing that an unencumbered sale would maximize the property's financial value for creditors.
The bankruptcy court's ruling is poised to have an immediate and measurable financial consequence on the forthcoming sale proceedings. Prospective purchaser Micah Bowen, a prominent businessman from Central Texas, has already submitted conditional offers demonstrating the financial impact of the covenants, proposing to pay $13 million if the property is transferred without the restrictions, but reducing his bid to $10 million if the operational limitations remain attached to the title.
The disputed deed covenants establish substantial operational limits on the riverside concert grounds. Under the current rules, events at the outdoor venue are generally confined to Saturday evenings spanning from May through August, with narrow exceptions permitting performances on additional dates during the Memorial Day, Fourth of July, and Labor Day holiday weekends. Outside of those designated dates, shows are generally prohibited, and all amplified musical performances are required to shut down by 11:30 p.m.
Kona Coast entered Chapter 11 bankruptcy protection in July as an emergency maneuver to block an impending foreclosure action initiated by its primary secured lender, MAV WTW Holdings LLC. In an effort to generate more robust bidding at the court-supervised liquidation, the debtor sought judicial intervention to eliminate the land covenants, asserting that prospective purchasers would be willing to pay substantially higher sums for unrestricted real estate.
During an evidentiary hearing held on Wednesday, Kona Coast manager Will Korioth took the witness stand to argue that the historic deed restrictions had effectively been rendered null and void through continuous noncompliance. Korioth testified that the amphitheater had repeatedly staged musical performances on days other than Saturdays, asserting that these chronic infractions had occurred to such an extent that the restrictions had become legally unenforceable through abandonment.
Judge Thomas, however, firmly dismissed the debtor's legal reasoning concerning waiver and abandonment. In her written assessment, the judge acknowledged that while Kona Coast had presented evidence indicating it regularly violated the rules by staging concerts on non-Saturdays and non-holidays, simply demonstrating past noncompliance falls far short of meeting the rigorous legal evidentiary standard required under Texas state law to establish the permanent abandonment of a covenant.
The effort to dismantle the land-use limits encountered fierce opposition from SUN NG Whitewater RV LLC, the neighboring property owner that operates Camp Fimfo, an expansive outdoor camping and recreational vehicle resort located adjacent to the amphitheater. SUN NG asserted that it holds enforceable legal rights under the existing covenants and insisted that the protections must remain fully intact for any future purchaser of the amphitheater property.
Testifying on behalf of the neighboring resort, SUN NG manager Zachary Bossenbroek told the court that allowing the music venue to operate unrestricted concerts 365 days a year would severely degrade the commercial value and overall guest appeal of Camp Fimfo. Bossenbroek highlighted that more than $100 million has been invested into developing the RV resort and emphasized that the business heavily depends on the deed covenants to safeguard that substantial capital investment.
The underlying dispute regarding the covenants has also been playing out in local state court. Back in April, Kona Coast filed a formal lawsuit in Comal County District Court against both SUN NG and noteholder MAV WTW Holdings LLC, asking a state judge to issue an order definitively declaring the operating restrictions unenforceable.
Rather than resolving the substantive enforceability of the covenants in the bankruptcy forum, Judge Thomas chose to maintain the legal status quo to protect SUN NG's property rights during the bankruptcy process. She ruled that any bankruptcy sale must remain conditioned upon resolving the ultimate validity and enforcement of the restrictions, whether through the ongoing Comal County litigation or an alternative legal proceeding, thereby placing the responsibility on the eventual buyer to either fight the state lawsuit or negotiate a direct settlement with SUN NG.
Following the issuance of the opinion, Bossenbroek expressed satisfaction with the court's refusal to grant Kona Coast's motion, stating in an email that the operating restrictions will remain attached to the real estate and that any purchaser acquiring the Whitewater Amphitheater will take the property subject to those terms. Neither Korioth nor legal counsel representing Kona Coast in the bankruptcy matter immediately responded to requests for comment.
The bankruptcy court has established a strict procedural timetable for the impending disposition of the music venue and its adjacent real estate holdings. Interested parties looking to acquire the property must submit their formal qualifying bids no later than September 22, which will pave the way for a competitive bankruptcy auction scheduled to take place on September 28.
Under the court-ordered timeline, the winning bidder must finalize the transaction and close on the acquisition by October 22. If the purchaser fails to complete the closing by that designated deadline, secured lender MAV WTW Holdings LLC will be legally authorized to proceed with a foreclosure sale on November 3.
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