TWO HARBORS – When Bryce Campbell purchased Superior Shores in January 2020, his intention was to “conquer” it. 

“Our entire career was founded on turning underperforming properties around, and Superior Shores was to be our ultimate challenge,” Campbell told this reporter just before midnight on July 31. 

In a rare interview with the press, Campbell said the recent events involving his ownership of two resorts on the North Shore “would appear to be right out of a movie.” Lutsen Resort in Cook County burned to the ground in February. More recently, the lone judge presiding over the North Shore stripped Campbell of his ability to operate and manage Superior Shores near Two Harbors. 

“I have been absolutely crushed by the recent events,” Campbell said. “Not only the events themselves but the betrayal that has come with them.”

North Shore Judge Steven Hanke issued an emergency ruling on July 24 that temporarily removed Campbell’s control of operations at Superior Shores. The order, among other things, appoints a temporary manager to be in charge of operations at Superior Shores because the “property and its rents and profits are in danger of loss and material impairment.” Hanke upheld the ruling during a July 31 hearing that lasted more than three hours. Hanke also gave attorneys involved with the case on both sides until August 7 to file briefs in the case. 

What’s known with certainty is that Joe Re, who previously owned Superior Shores with his business partner Dale Jensen, agreed to sell Superior Shores to Campbell on a contract for deed four years ago. The COVID pandemic changed the hospitality industry about three months later, with Campell and Re agreeing, at least over emails presented to the court this week, to alter the terms of the deal. 

During the hearing Wednesday, Re’s attorney, Mark Thieroff, said Campbell has not honored the terms of the contract for the deed. Thieroff said insurance policies at the resort were canceled for nonpayment, real estate taxes went unpaid, and Campbell repeatedly failed to produce required financial reports.

As a result, Hanke agreed to place Superior Shores under the management of Kinseth Hospitality Companies, Inc., which is based in Coralville, Iowa. During the July 31 hearing, the company’s executive vice president, Bruce Kinseth, said some of his staff arrived at Superior Shores on July 26 following Hanke’s ex parte order and the appointment of the entity as the “receiver,” or temporary managers, of the resort. Upon initial review of the situation, Kinseth described Superior Shores as a “financial disaster.”

According to the order signed last week by Hanke, under Campbell’s ownership at Superior Shores “association dues have not been timely paid, real estate taxes are delinquent, and payments to various local vendors have not been made,” among numerous other allegations. Kinseth, who appeared via Zoom during Wednesday’s hearing (as did all the participants), said his team was unable to find any financial statements for the past two years. They also discovered a “tremendous amount” of bills due, Kinseth said, adding that some people Campbell and the resort owe money to have come to the property “demanding payment.”

One of the key issues that surfaced in the initial emergency order from Hanke signed July 24 and continually addressed during the July 31 hearing were lump sum, or “balloon payments,” due from Campbell to sellers Re and Jensen. According to the July 24 order signed by Hanke, Campbell failed to make the nearly $13 million in balloon payments to the sellers as required by June 1 of this year. 

Campbell and his attorney, Scott Witty, provided emails to the court Wednesday that they say show Re agreed to extend the deadline of the balloon payments until June 2025. While speaking under oath during this week’s hearing, Re said the agreement was never officially completed. Witty questioned Re at length on this specific topic during the hearing, pointing out that the seller agreed to and implemented every other term in the unsigned agreement, including lowering interest rates during the early days of the COVID pandemic. 

Witty claims that the terms of the contract for the deed were altered regarding Campbell’s ownership of Superior Shores during “COVID-19 stay-at-home orders.” As a result, the balloon payments that total approximately $13 million were not due until June 2025. Ultimately, it could be up to Hanke to determine if the emails constitute a legally binding agreement or not. 

For his part, Campbell says “so much” of what he heard during the July 31 regarding his financial woes and alleged mismanagement of Superior Shores “was recycled and not the truth.” Campbell and Witty say the Superior Shores property is fully insured, and that any taxes owed against the property were on schedule to be paid. Witty and Campbell did not specifically address claims about money owed to contractors, vendors, and others that Thieroff noted and are listed in court records. 

In fact, Campbell suggested during the court proceedings and to this reporter that Superior Shores is in better financial shape and physical condition than it was when he bought it. 

“It’s certainly my opinion that the actions of the seller and lender are simply taking advantage of a property that was worth $14.5 million when we took over and the most recent valuation put the property at just under $30 million,” Campbell said in an emailed statement. “This is because of our hard work and impressive unit sales.”

Campbell said during Wednesday’s hearing that he sold units at the resort totaling $4 million during the first half of the year. In addition, there are several more units with pending sales, likely generating several more million dollars. Campbell noted that unit sales hadn’t been occurring at the resort on this scale since 2008.

“Our financial ability was about to be better than it’s ever been,” Campbell said Wednesday. 

Witty described Re’s request to have a temporary management company come on board and strip Campbell of his rights to run the resort as “a ploy to get the property back by the seller, who now realizes that the buyer has put a ton of money into improving the property.”

Campbell said the plaintiffs “tried to discredit our concerns that a receiver is detrimental to the business” during the hearing Wednesday. In another email sent to this reporter on Aug. 1, Campbell said tangible results are already coming in that support his concerns. 

“While I’m sure Kinseth Hospitality is successful, a property in receivership rarely is. I’ve seen hundreds of properties throughout the years in various deal flow networks and every time one is in receivership the numbers are always abysmal,” Campbell said. “The reality is simple, a receiver cannot perform the same success as an owner-operator who’s onsite putting in their own blood, sweat, and tears.”

Campbell said it did not take long for his concerns to be validated. For example, the week prior to the court order, Campbell explained, Superior Shores brought in $160,000 in reservations. In the week immediately following the appointment of Kinseth Management at Superior Shores, the resort only generated $105,000 in reservations, according to Campbell. 

Despite recent warnings from the city of Two Harbors that utilities would be shut off at Superior Shores, alleged vendor debts, and lawsuits and other claims alleging financial mismanagement for lack of payment that now stretch across two counties, Campbell said he hopes “everyone sees the truth” that his company was “current on our monthly payments, that our debt isn’t due until next year, that the property was in fact insured.” Campbell said he hopes “most of all” that people understand that the resort recently was “doing well financially” and “enjoying great success” of recent unit sales.

“I’m so very proud of the work we did at the property,” Campbell said in his statement sent to The Shore Thing. “The testimony I heard (July 31) regarding the property condition was insulting, especially compared to what it was four years ago. There certainly is still work to be done at the place, it’s dated, but we have so many plans to continue to improve this diamond in the rough.”

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Below is Bryce Campbell’s full statement verbatim as it was sent to The Shore Thing and this reporter on July 31. 

"This recent saga would appear to be right out of a movie! I have been absolutely crushed by the recent events, not only the events themselves but the betrayal that has come with them.

Superior Shores was to be my ultimate conquer. Our entire career was founded on turning under performing properties around, and Superior Shores was to be our ultimate challenge. This deal was years in the making, with us pulling out of the deal twice, another buyer coming in after only to pull out for the same reasons. Finally, someone close to the seller convinced us to take our one and final shot at it and we were willing to do so if the terms were right to make up for the massive concerns outlined in the PCA reports we obtained during the second round of due diligence.

Jan 1st of 2020 came, and we were hard at it to turn around what was only half of the bookings YOY on the books. Our work would be immediate. Less than 3 months later; previous management’s numbers were the least of our concerns, we were about to have zero revenue with state mandates. If we were going to tough it out and weather the storm the terms had to change. What we agreed to was less than we originally started to negotiate, we finally made the compromise of a 1-year extension for the balloon, the immediate months for the shut down were zero interest, and finally interest only in August at 2.96% with our 4.25% payments to resume the following august and continue with the last payment June 1st 2025.

So that is correct, this isn’t a case of not making payments, in fact all debt service payments are current!

It’s certainly my opinion that the actions of the seller and lender are simply taking advantage of a property that was worth $14.5mm when we took over and the most recent valuation put the property at just under $30mm. This is because of our hard work and impressive unit sales (that hadn’t been seen at the property since 2008). There was massive, deferred maintenance and buildings that were about to fall into the lake before we did a massive shoreline restoration making the Burlington Bay units finally sellable once again. This was literally fixing the shortcuts the seller took during construction and blatant deferred maintenance. The seller even told us the reason the pool deck fell in was because of “woodchucks” trying to divert our attention from the 7 figure problems he refused to take care of under his ownership.

I’m so very proud of the work we did at the property. The testimony I heard today regarding the property condition was insulting, especially compared to what it was 4 years ago. There certainly is still work to be done at the place, it’s dated, but we have so many plans to continue to improve this diamond in the rough. The dining room was our fist full gut of the property earning an amazing accomplishment of 5 out of 5 on OpenTable, winner of the Wine Spectator award of excellence two years running now. Our guest surveys satisfaction score rose from 73% when we took over to recently 91%! We just sold $4mm worth of units with another $1mm lined up and negotiations on another $3mm worth of real estate sales. The place was finally taking off just in time for someone to step in and try and reap the benefits that are ours, and well earned from years of hard work and investment. We put millions into the place and reinvested every single dollar. I’ve never taken a salary or a single dollar in dividends from our properties down here and strongly believed in continuing to invest the profits back in to improve them to create memorable guest experiences.

I hope today’s evidence truly shows our position we outlined, and what I’ve touched on writing this. The entire events are heartbreaking and hard to believe, but during this I can’t believe the betrayal. Not only from the lender, but from the person who I had thought was supposed to be my right-hand side. A member of our corporate team we discovered had been working with the lender since Feb 13th right after the tragic Lutsen fire. I think there was many little things mentioned that were being exaggerated. We had a horrible winter, all resorts did, if you asked us about our payables in April they were aged. But here we are in summer now, finally catching up and all of this is being tossed at us again which isn’t even relevant. When it was relevant the betrayal seems to be from two individuals. Joe Re telling me I just must get to summer, and he knows we’ll be fine. I’d say that was rather him trying to get us to keep paying the bills during the money losing months, and the individual who was tasked to help get us caught up was instead doing the opposite and sending half truths to Joe to make us look bad. The betrayal has come to light in e-mails we’ve uncovered, secret meetings that were being had with board members, even what appears to be fraud at the DMV to increase the fleet for the resort he was positioning himself to take over as GM.

So much of what I heard today was recycled and not the truth. Even a humble brag claim from the receivership company that they were able to go live with an online travel agency due to their past good relationship. This was especially surprising considering the payment made to this company was made myself, while another member of our management team worked on the integration for an entire month causing it to go live 17 days before the receivership took over. Just one mere example of the actual truths. Another flat out lie was the report of an employee being taken away for heat stroke from the kitchen, if it happened it was after the receiver took over, because that certainly never happened under our management.

One of the complaints was that insurance was cancelled. Interestingly enough it was pertaining basically just to our additional umbrella coverage, something that this individual was supposedly helping me deal with. Instead, it was quickly run to Mr. Re. Unfortunately, the bigger picture was left out, that the resort property was in fact still very much insured as we proved today and what was already communicated to the lender.

There were other frustrations as well, especially regarding the water damage. This one hit hard because I’ve been fighting for months to get insurance to fund the completion of the project. And yet the accusation seemed to me to suggest we did something else with the funds, even though every dollar of the claim went into the appropriate association account.

In the end, I hope everyone sees the truth, that we were in fact current on our monthly payments, that our debt isn’t due until next year, that the property was in fact insured, and most of all that the resort recently was doing well financially and enjoying great success of recent unit sales."