PENDLETON – A bankruptcy protection filing last week postponed the auction of Lehman Hot Springs, the troubled resort near Ukiah.

Three people waited Wednesday morning, June 23, on the front steps of the Umatilla County Courthouse for the auction, only to have a county official reveal the hot springs’ owner electronically filed for Chapter 7 bankruptcy protection at 6:20 the night before.

John Patrick Lucas owns Lehman Development Corp., which in turns owns the resort and has deep debt tied to it. The corporation owes $929,000 in principal and interests to multiple creditors, as well as another $2,100 in attorney fees and other costs.

The resort was last up for auction on the morning of April 28. But Lehman Development Corp. filed for Chapter 7 bankruptcy protection shortly before the auction, thus stalling it. In May the U.S. Bankruptcy Court dismissed the filing because the corporation didn’t submit all necessary documents and failed to pay the $299 filing fee.

The court will again review the case, but in the meantime the filing keeps multiple creditors off Lucas’s back. Chapter 7 bankruptcy cases often end in liquidation of the filer’s assets.

Portland broker Walter Ratzlaf holds the note on the resort’s mortgage, and Monument resident Philip Merricks wants to buy Lehman Hot Springs and restore it to some former glory. Both were present in case there was an auction, and each took the lack of such in stride.

Ratzlaf said he has property in Hermiston, so the trip won’t be for naught. Merricks said he planned on driving by Lehman Hot Springs to see if Lucas has begun work to empty the resort’s sewage lagoons in compliance with an agreement to clean up the resort.

The Oregon Department of Environmental Quality has repeatedly cited and fined Lucas and the resort for environmental violations, and the watchdog agency has accused the site of allowing as much as 20,000 gallons of sewage wastewater to spill daily into a tributary of the John Day River. Lehman Hot Springs operated without an environmental permit for several years after 2002.

Last November, the state finally shut down the resort because of those violations. On May 25, Lucas signed an agreement with the DEQ to empty the upper and lower lagoons by June 30 – next Wednesday – and make any repairs to them by Sept. 30. If the repairs are not feasible, Lucas must plug nearby sewer lines and carry out other measures to close the site by Oct. 8.

The Oregon Department of Justice also is pursuing a criminal case against Lucas for not complying with court orders to empty the site’s wastewater lagoons back in 2009. The trial for that contempt charge is set for July 6-8 in Umatilla County.