MARK SCHUMANN

Last week, Indian River County Commissioner Tim Zorc filed for Chamber 7 bankruptcy in federal court. Zorc contends his personal debt of potentially more than $1 million stems from a failed business partnership between he, Chuck Mechling and Steve Melchiori, all partners in Southern Classic Homes. The company’s primary focus was building homes in two of Mechling’s developments, Pointe West and Collier Club in Sebastian.

Zorc claims he put money into Southern Classic Homes, including charging more than $100,000 on his credit card, and drawing from his children’s college funds, with the promise he would be repaid when Mechling sold a parcel of land in Sebastian to the St. Johns River Water Management District.  Bought by an LLC called Spirit Development in November, 2006 for $1.7 million, the land was sold to the water management district in June of 2008 for $7 million. Mechling was the registered agent for Spirit Development.

Mechling said he put the proceeds from the sale of the Sebastian property into his businesses.  Zorc, in a lawsuit filed in 2012, contends otherwise, at least to the extent that none of the money went into Southern Classic Homes.  Mechling counters that Zorc was never a partner in Spirit Development.

When Zorc first filed to run for the County Commission in 2012, some, including Mechling, said Zorc was overstating his assets by listing as receivables money he claims he is owed by Southern Classic Homes.  Mechling supported Zorc’s opponent in the general election, architect Tony Donadio.

Zorc’s 2012 lawsuit also names as defendants two other companies in which Mechling has an ownership interest, Onsite Management Group, and Pointe West of Vero Beach.

In August of last year, Pointe West Development filed for reorganization under Chapter 11 bankruptcy protection. The reorganization plan, Zorc claims, would release Mechling from any liability for the $3 million loan to Southern Classic Homes now held by Wells Fargo Bank. Mechling said it is not that simple, and court documents confirm Mechling’s release of liability would only follow his fulfillment of a negotiated payment plan. Further, Mechling said, Zorc could have chosen to negotiate a settlement plan with Wells Fargo but instead filed for personal bankruptcy protection.

Earlier this month, Zorc was served with a deficiency judgment by Wells Fargo Bank on a $3 million loan to Southern Classic Homes secured with personal guarantees by Mechling, Melchiori and Zorc.

Zorc said his attorneys advised him that filing for Chapter 7 bankruptcy was the only way to position his creditors to benefit in any way from the Chapter 11 reorganization of Pointe West Development.  In earlier court filings Zorc had been listed as a Pointe West creditor with claims of $855,000, but the proposed bankruptcy settlement, he said, leaves him and his creditors out.

The following is a link to an August 27 report on Commissioner Zorc’s late filing of a required personal financial statement with the State of Florida. MORE…