Reading the break: as the recession recedes, some luxury golf-course developments dig themelves out of mountains of debt with dirt-cheap deals.

• Author: Bouts, Trent
• Position: SPECIAL SECTION - Geographic overview

The deliberately unoiled springs emit a drawn-out screech before the screen door slaps shut. The subliminal message is intended to romance prospective buyers visiting the sales office at Balsam Mountain Preserve with a sense of simpler times, and the rustic refrain does call to mind the bucolic existence of the families that settled this part of Appalachia. Of course, most of those clans were dirt poor, which is also a subtle similarity to the luxury golf community near Sylva that was, until recently, about as broke as the Scotch-Irish pioneers that came before it.

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Snowmass Village, Colo.-based Chaffin/Light Associates Co. purchased 4,400 acres of North Carolina mountains in 1999, started taking reservation orders two years later and put lots on public offer in 2004. But when Balsam Mountain was ready to kick into high gear, opening its Arnold Palmer-designed course in 2007, the recession delivered it a kick in the rear. Out of fear or their own financial plight, the buyers of high-end second homes disappeared, and the credit market contracted just as swiftly.

Until then, Chaffin/Light had been a prosperous, well-credentialed operation with a portfolio of successful developments in the Carolinas and Colorado. But in late 2009, it defaulted on debts of $19 million at Balsam Mountain. It didn't help that construction costs on the golf course had soared from a budgeted $12 million to more than $20 million. Developer Jim Chaffin blames the downfall on a tsunami of devastating events.

Its largest lender, TriLyn LLC, a Greenwich, Conn.-based private-equity firm, foreclosed and called in receivers. For a couple of months, Balsam Mountain shut down everything except its security service and essential maintenance, which included the golf course. TriLyn and its parent company, Bahrain, India-based Investcorp Bank B.S.C., formed a new entity, Vestlyn BMP LLC, to assume ownership and operations, rejecting buyout overtures from several parties, including a group of existing property owners who raised $8 million. Chaffin/Light also attempted a settlement that one newspaper report claimed would have satisfied most lenders.

But Vestlyn refused to part ways with Balsam Mountain. "Our view is very different than a typical lender. A typical lender would not want this on the balance sheet," Managing Partner Mark Antoncic told the Smoky Mountain News at the time. "If you bail today, you lose all that. We would turn over a good asset to...