Sea Palms Council of Co-Owners, the unincorporated association that governs a timeshare community at Edisto Beach, South Carolina, filed a chapter 11 Subchapter V petition on June 26, 2026 in the U.S. Bankruptcy Court for the District of South Carolina, Case No. 26-02880. The board says the filing exists to force a section 363 sale of the property, terminate the timeshare plan, and dissolve the association after distributing net proceeds to owners.
The debtor reported no secured debt as of the petition date and roughly $2.64 million of cash on hand as of May 31, 2026, so the case opened without a debtor-in-possession financing motion. First-day relief instead centered on continuing existing cash-management, tax, and insurance arrangements while the board pursues a court-supervised sale of the six-building, 25-unit property at 371-395 Sea Clouds Circle.
U.S. Bankruptcy Court, District of South Carolina (Charleston Division)
Case Number
26-02880
Petition Date
June 26, 2026
Judge
Hon. L. Jefferson Davis IV
Property
371-395 Sea Clouds Circle, Edisto Beach, SC (6 buildings, 25 units, 1,300 unit weeks)
Claims Agent
Omni Agent Solutions
Case Snapshot
Timeshare Ownership Structure and Capital Needs
Sea Palms operates as a horizontal property regime governed by a board of administrators. The declaration of Kent Lovett in support of the first-day motions identifies Lovett as president, Dr. C. Alan Legg as vice president, and Jennifer Espinoza as secretary/treasurer. Wyndham Vacation Management, Inc. provides day-to-day management, maintenance, and financial services for the property under a management agreement with the association.
Ownership of the property's 1,300 unit weeks is concentrated among a small number of holders rather than spread across individual owner-occupants. As of May 8, 2026, the association itself owned 58 unit weeks (about 4.46%), First American Trust held 798 weeks as trustee (about 61.38%), and WVR held 226 weeks (about 17.38%).
The board's stated capital needs drove the sale decision. The declaration estimated repairs, capital improvements, and renovations of approximately $2.634 million from 2025 through 2029, alongside occupancy rates of 67.9% in 2024, 72.5% in 2025, and a projected 68.3% for 2026.
Member Vote, Occupancy Suspension, and Sale Authorization
Association members voted on October 23, 2025 to authorize the board to file chapter 11 to sell the property. The board and Wyndham later suspended occupancy at the property after December 27, 2025. By May 1, 2026, the debtor reported $119,056.04 of past-due assessment fees owed by 25 owners.
The voluntary petition and accompanying board resolutions authorize a court-approved marketing and sale process for the property, a sale free and clear of interests, termination of the timeshare plan, and retention of K&L Gates LLP, Hilco Real Estate, LLC, Campbell Law Firm, and Wyndham Vacation Management to carry out that process. The debtor's stated end state is to distribute net sale proceeds to unit-week owners after allowed claims and dissolve the association. No sale motion, bidding procedures, stalking-horse agreement, or auction result had been filed as of July 17, 2026.
Cash Position and First-Day Operating Relief
The debtor's cash-management motion identifies checking and sweep accounts at Comerica Bank and Truist Bank, a reserve account at Ameriprise Financial Services LLC held through Comerica, and an investment account also held through Ameriprise, together holding the $2,639,501.88 of cash reported as of May 31, 2026. The motion sought only authority to continue those existing accounts and cash-management systems — not new financing — and estimated bank service charges of about $237 per month and credit-card fees of about $405.84 per month.
The tax motion sought authority, but not direction, to pay prepetition taxes and related obligations. The debtor estimated total prepetition taxes and fees of approximately $49,715.80, including $43,931.53 of real and personal property taxes and no accrued unpaid income taxes as of the petition date. It also projected a 2026 income tax burden of about $18,903, of which $9,266.30 had already been paid prepetition. The motion argues that payment avoids statutory liens, penalties, and potential director/officer exposure for trust-fund taxes.
The insurance motion covers commercial real property, general liability, automobile, excess liability, umbrella, D&O liability, property-liability, and environmental/pollution policies, placed through broker Stephens Insurance, LLC, with HDI Global Specialty SE as the D&O carrier. The debtor reported about $174,374 in aggregate insurance premiums during the 12 months before the petition, including about $132,092.90 for its share of umbrella coverage and a $7,950 annual D&O premium, and argued that a lapse could impair estate value given that the property is the debtor's principal asset.
K&L Gates, Campbell, and Omni Professional Retentions
Campbell Law Firm, P.A. sought retention as debtor-in-possession counsel at hourly rates of $500 for Kevin Campbell, $450 for Michael H. Conrady, $350 for Suzanne Campbell Chisholm, and $150 for staff. The firm received a $12,500 retainer, applied $4,545 to prepetition services, and holds the $7,955 balance in trust. No order approving the application had appeared on the docket as of July 17, 2026.
Omni Agent Solutions, Inc. sought retention as notice, claims, and solicitation agent effective as of the petition date, with duties covering case noticing, claims register maintenance, proof-of-claim processing, claim-transfer recording, plan solicitation and balloting, and case website maintenance. The debtor paid Omni a $10,000 retainer plus a $7,500 replenishment payment prepetition.
K&L Gates LLP sought retention as bankruptcy co-counsel, with a scope covering association governance, debtor-in-possession duties, sale and bidding procedures, claim objections, plan and liquidation issues, distribution of net sale proceeds, and dissolution. The firm disclosed $75,000 paid prepetition, with $74,355.50 applied to prepetition fees and expenses and $644.50 remaining as a postpetition retainer. K&L Gates disclosed unrelated prior representations of certain parties in interest and outlined a conflicts protocol under which Campbell would handle debtor-side disputes if an actual conflict arises. The application identifies Hilco Real Estate, LLC as the association's intended real estate broker for the planned property sale; no separate application to employ Hilco had appeared on the docket as of July 17, 2026.
Cash-Management Objection and July Schedules
On July 10, 2026, the U.S. Trustee filed an omnibus response to the debtor's tax, insurance, personally-identifiable-information, and cash-management motions. The response says the U.S. Trustee and debtor had resolved the tax and insurance issues, with revised proposed orders to follow, and expected the PII motion to be resolved as well, but the U.S. Trustee objected to the debtor's request to waive Bankruptcy Code section 345(b) for its existing cash-management system.
The U.S. Trustee's filing reports that the debtor's reserve account held $2,320,375.24 as of May 2026, including $585,291.80 in U.S. Treasury notes and $1,735,083.44 in the BNY Dreyfus Government Cash Management Wealth fund, plus $12,700.02 in the investment account held in the same fund. The U.S. Trustee argued the record did not establish that the fund satisfies section 345(b)'s deposit and investment protections, and asked the court to deny the waiver and require the debtor to hold estate funds in U.S. Trustee-approved debtor-in-possession accounts instead. At the July 14, 2026 hearing, the court granted the cash-management motion on an interim basis, with a written order due from debtor's counsel by July 20, 2026; the docket entry did not specify whether that interim grant resolved the U.S. Trustee's section 345(b) objection, and no written order had appeared on the docket as of July 17, 2026.
The debtor also moved to extend its schedules deadline from July 10 to July 13, 2026, citing the July 4 holiday and management-company and board scheduling constraints, while representing that the August 3 meeting of creditors would not be affected. The debtor filed its statement of financial affairs on July 10, 2026, and the court granted the extension through July 13, warning that a missed deadline could result in dismissal without further notice or hearing.
The debtor filed its schedules of assets and liabilities on July 13, 2026. Schedule D shows no creditors holding secured claims, consistent with the first-day declaration's no-secured-debt position, while Schedule E/F reports $0 in priority unsecured claims and $35,915.91 in nonpriority unsecured claims. Schedule A/B lists June 30 balances across six accounts: $0 in the Comerica operating checking account, $23,180.69 in the Comerica operating sweep account, $12,734.17 in the Ameriprise/Comerica investment brokerage account, $2,325,530.12 in the Ameriprise/Comerica reserve brokerage account, $10,000 in the Truist operating checking account, and $242,053.83 in the Truist operating sweep account — a combined $2,613,498.81 across the six disclosed accounts.
Key Timeline
Date
Event
October 23, 2025
Association members vote to authorize a chapter 11 filing to sell the property.
After December 27, 2025
Board and property manager suspend occupancy at the property.
May 1, 2026
Debtor reports $119,056.04 of past-due fees from 25 owners.
May 31, 2026
Debtor reports approximately $2.64 million of cash on hand.
June 26, 2026
Chapter 11 Subchapter V petition filed.
June 29, 2026
Subchapter V trustee appointed; first case notices filed.
July 10, 2026
U.S. Trustee objects to the section 345(b) cash-management waiver; debtor files its statement of financial affairs and moves to extend the schedules deadline to July 13.
July 13, 2026
Court grants the schedules extension; debtor files schedules showing no secured claims and $35,915.91 in nonpriority unsecured claims.
July 14, 2026
Court holds hearing on the U.S. Trustee's cash-management objection; grants the cash-management motion on an interim basis, with a written order due by July 20, 2026.
August 3, 2026
Section 341 meeting scheduled by telephone.
August 5, 2026
Pre-status report due.
August 19, 2026
Status conference scheduled in Charleston.
September 4, 2026
Non-governmental proof-of-claim bar date.
October 2, 2026
Deadline to oppose discharge or dischargeability.
December 23, 2026
Governmental proof-of-claim bar date.
Frequently Asked Questions
Who is the claims agent for Sea Palms Council of Co-Owners?
Omni Agent Solutions serves as the notice, claims, and solicitation agent under its retention application. The notice of the chapter 11 case set September 4, 2026 as the bar date for non-governmental proofs of claim and December 23, 2026 as the governmental bar date.
What happens to the timeshare property?
The board intends to seek section 363 sale authority for the property, terminate the timeshare plan, distribute net proceeds to unit-week owners after allowed claims, and dissolve the association, as described in the first-day declaration. No sale motion or bidding procedures had been filed as of July 17, 2026.
Why did Sea Palms file chapter 11?
Members voted on October 23, 2025 to authorize the filing after the board identified approximately $2.634 million in needed repairs and capital improvements through 2029 and suspended property occupancy after December 27, 2025, according to the Lovett declaration.
Did the debtor obtain DIP financing?
No. The debtor reported no secured debt as of the petition date and roughly $2.64 million of cash on hand as of May 31, 2026, and its cash-management motion sought only continued use of existing bank accounts rather than new financing.
omnibus response /documents/1b636edf-8c0a-46eb-9bc5-b14c6cd64cc6/
moved to extend its schedules deadline /documents/7f07b040-7dac-418a-bca7-63f41fea56a4/
statement of financial affairs /documents/1f70dd1e-3f57-4e02-84dd-75246174a608/
granted the extension /documents/4fa5c106-524f-4e1e-ba09-69b6bc8f6f00/
schedules of assets and liabilities /documents/3718e631-4813-4b6e-bf41-3c5037ff9e2c/
notice of the chapter 11 case /documents/f99a0066-ea33-4836-b737-448140eda881/
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. See the disclaimer.