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"The Castle" in Pinehurst, a French chateau-style mansion built in 1927, now on the National Register of Historic Places, is being purchased through a foreign bankruptcy proceeding in U.S. federal bankruptcy court.

The unusual event is one of a few cases in North Carolina since a new federal Chapter 15 bankruptcy law went into effect last year. It allows a foreign bankruptcy proceeding to be established in U.S courts.

The proceeding was conducted by a federal judge in July in U.S. Bankruptcy Court in Winston-Salem following months of parallel court proceedings in Japan and in the United States.

The property went up for sale immediately, advertised nationally through Forbes business magazine and on the Internet, said listing agent Bill Sahadi of Fore Properties in Southern Pines. The transaction and title transfer will occur Aug. 21 in Pinehurst, he said.

No one will disclose the identity of the purchaser or the purchase price. Sahadi said he had suggested listing it for sale at $2.1 million, but the court-appointed trustee, Manjiro Yamakawa, wanted the listing price to be $2.3 million.

Attorney Kirsten Foyle worked with Sahadi. Other attorneys and another Realtor represented the buyer and seller.

"It was a complicated and difficult process," Sahadi said.

One of the main complications was the language barrier. Japanese and American officials had different interpretations of certain documents that were in English. The Japanese are more literal-minded, he said.

Gestrion Privee Location, a French holding company, is selling the property through Yamakawa, according to Sahadi.

Over the front entrance embedded in a new door frame to The Castle is a logo with the letter "G," designating the company that the previous owner, a Japanese investor known as Mr. Hata, had formed.

Hata purchased the castle in 2004 and began renovating The Castle. He has since disappeared and his company is undergoing bankruptcy proceedings for many properties around the world, not just The Castle in Pinehurst.

Wayne Haddock, owner of Pinehurst Homes and the general contractor for the renovation work, said in a telephone interview that an estimated $1.7 million had been spent to fix the 5,500-square-foot two-story structure for Hata.

Hata's plans were to turn The Castle into a Japanese golf guest house as a business investment.

Massive Renovations

Hata purchased The Castle from retirees Dick and Mimi Kessler, who had bought it in a 1986 foreclosure sale. Arthur P. Skula purchased it in 1984 for $305,000 from Tom and April Brooks, who had owned it since 1974. In two years, a bank foreclosed on Skula, and the Kesslers snapped it up. Skula owned Foxfire Resort and Country Club at the time.

Mimi Kessler was a native of Osaka, Japan. She was a well-known cat lover.

The Kesslers planned to make it their retirement home and restored much of the interior. They even put in a Japanese garden.

The house has not really been lived in for at least five years, Sahadi said.

After Hata purchased the home as an investment, he immediately embarked upon a massive renovation.

Haddock and a team of contractors and other companies recreated the interior to the new owner's specifications, with new wiring, plumbing, windows and an alarm system, copper gutters, brass heat and air registers, a new high-tech kitchen with granite counters, new cherry wall panels with a doorway imported from Europe and cherry hardwood floors.

Marble and mahogany wood are used lavishly throughout the home, including two marble fire places with gas logs.

Also imported was a dramatic mixture of French furniture and draperies mixed with Renaissance brocades and velvets, displaying gilt tassels and tiebacks, crystal chandeliers and other sumptuous furnishings.

"The labor-intensive overhaul has seen over 95 percent of the home reformed, redesigned, updated and reshaped," Sahadi said.

Liens for remaining money owed to contractors will be satisfied from the sale.

Haddock said that he never met Hata. Payments were wired to his company for work during construction. The CEO of Hata's holding company served as his contact.

"It was a pleasure to get involved, to get the Castle back to where it needed to be, to where it had been," Haddock said.

The structure's status on the National Register of Historic Places by the U.S. Department of the Interior is displayed on a bronze plaque on a brick pillar on one side of the driveway entrance. Across the driveway, another plaque is inscribed "The Castle."

Series of Owners

According to research done in Tufts Archives and other places by a staff member of Fore Properties, Percy Thompson, a native of Canada, built The Castle over a four-year period, starting in 1927. It was to be a winter residence for the family. He spent the rest of the year in the Bahamas.

"He was really afraid of fire," Sahadi said.

Thompson's remedy was using concrete building materials that truly turned The Castle into a fortress.

In 1946, Van B. Sharpe, a Carthage businessman bought it for $35,000 from the Thompsons. Sharpe lost the home through a foreclosure.

The home had a series of owners between 1951 and 1986, including Troy Lumber Co., Ward Supply Inc., an Arkansas corporation, April Corp., a company started by Brooks, who lived there with his wife April for 10 years until 1984, Skula, the Kesslers and then Hata.

The rambling, two-story brick dwelling has a steep-hipped roof, with both round and polygonal towers boasting a large front chimney, according to a flier produced by the listing company.

An underground garage is on the south end. The home is situated on two lots that total 1.15 acres.

The exterior is "virtually unaltered" from the early photos. Haddock said the house was red brick originally, then painted white, sandblasted back by another owner to the original red brick and is white again with a fresh coat of paint.

The Castle has four bedrooms, five full baths and two half-baths. There are a six-zone heating and air system and two 80-gallon hot water heaters.

Sara Lindau can reached at 693-2473 or e-mail at slindau@thepilot.com.