Montco swim club in racial flap files for bankruptcy

The Huntingdon Valley swim club embroiled in a racial controversy over the summer has filed for bankruptcy.

The Valley Club, which revoked a contract with the Creative Steps day camp after 56 black and Latino children made their first visit to the club June 29, filed a bare-bones petition for Chapter 7 bankruptcy Monday afternoon.

The step moves the club toward selling off its assets, which the filing states as being between $1 million and $10 million, to pay off its creditors. The bankruptcy petition lists the club's debts as between $100,000 and $500,000 but does not offer further specifics.

Valley Club's bankruptcy attorney, Michael A. Cibik, could not be reached yesterday, and club president John G. Duesler Jr. declined to answer questions.

"I'm sure it's in the documents," Duesler said in a brief phone interview.

In an e-mail to Valley Club members Thursday, Duesler wrote that debt from this summer's operating costs and legal fees "exceeds $100,000" and that only $1,100 had been collected in a request to the club's 400 bondholders.

"We need over $200,000," Duesler wrote in the e-mail, a copy of which a club member provided to The Inquirer on condition of anonymity.

The club's legal problems stem from its revoked deal with Creative Steps, an arrangement that has evolved into an ongoing investigation of alleged racism by the state Human Relations Commission, one filed lawsuit, and the threat of more litigation.

In September, the state agency concluded that the club had engaged in racial discrimination and proposed a fine of up to $50,000 to address one child's complaint. The Human Relations Commission still is investigating other claims and has not scheduled a public hearing, spokeswoman Shannon Powers said.

A federal class-action lawsuit filed by several children and a parent has been placed on hold by the bankruptcy filing. But plaintiffs attorney Brian R. Mildenberg said he plans to ask a court to let the case move forward.

"What's going to happen is eventually the property will be liquidated," Mildenberg said. "Then those funds would be used to pay creditors. If the children win their lawsuit, then they could be included."

A second group of children, parents, and camp administrators has said that it plans to sue. An attorney for the group did not return a call.

In an IRS filing as a nonprofit group, Valley Club listed its assets as $173,831 after the 2008 tax year, in which it spent $36,362 more than it took in.

Little more is likely to be known about the club's finances until the next series of bankruptcy papers, including financial schedules, is filed, court-appointed trustee Terry P. Dershaw said yesterday.

"The complete schedules sometimes tell a different story than what's on the petition," Dershaw said.

Financial documents are due to be filed with Chief U.S. Bankruptcy Judge Stephen Raslavich by Dec. 1.