Another downtown Aspen landlord goes bankrupt
June 25, 2010
ASPEN – The owner of three downtown Aspen parcels that were once advertised for $41.5 million filed for Chapter 11 protection this week, marking the third time since March that a downtown landlord has gone bankrupt.
Aspen Legacy Holdings LLC – owner of the Hyman Avenue buildings occupied by Little Annie’s Eating House and the former Huntsman Gallery, as well as the parking lot at the corner of Hunter Street and Hyman – filed a bankruptcy petition Wednesday in the U.S. District Court of Denver.
It’s the latest in a string of commercial bankruptcies involving downtown Aspen buildings.
In March, the Dallas-based owner of the old Stage 3 movie theater property, located at 625 E. Main St., filed for bankruptcy to stave off foreclosure proceedings. A bankruptcy auction for the property is scheduled Aug. 17 at the St. Regis Aspen Resort. The opening bid is set at $3 million.
And in May, the owner of the Dancing Bear Residences-Aspen development sought bankruptcy protection in Denver. But Monday, a Denver bankruptcy judge threw out the Chapter 11 move, on the grounds that it had been filed in bad faith because the property had been in receivership at the behest of two of its lenders.
Meanwhile, Aspen Legacy’s bankruptcy filing came just before a hearing was scheduled Thursday and Friday in Pitkin County District Court in front of Judge Gail Nichols, who was to rule on whether a receiver should be appointed to oversee all of the property’s financial dealings.
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The hearing was prompted by Carbondale-based lender Downtown Aspen Investments LLC, which claims Aspen Legacy has defaulted on a $9.2 million loan it obtained in October 2008.
The bankruptcy will put Aspen Legacy in a better position than receivership to reorganize its debts, said the LLC’s attorney.
“It’s too soon to know what we’re going to do: We’ll either refinance the property and take out the lender, or sell the property and take out the lender,” said Denver attorney Shaun A. Christensen.
The bankruptcy petition lists both Aspen Legacy’s assets and liabilities as between $10 million and $50 million.
The legal dispute between Aspen Legacy and Downtown Aspen Investments goes back to April, when the lender filed a motion to have a court-appointed receiver take control of the property.
Downtown Aspen Investments contends that Aspen Legacy defaulted on the loan agreement and deed of trust by inflating the appraisal of the three parcels, including at one time raising the asking price from $11.5 million to $18 million for the 9,000-square-foot parking lot.
It also claims that Aspen Legacy breached the agreements by using loan proceeds for household and personal purposes, including conveying ownership interest in the properties to members of the family of Edward Dingilian, the manager of Aspen Legacy. Aspen Legacy’s 2008 tax return also failed to disclose proceeds and escrow funds from the loan in question, Downtown Aspen Investments contends.
Downtown Aspen Investments attorney Tracy L. Ashmore, of Denver, declined comment Thursday.
Christensen, however, said he expects Downtown Aspen Investments to take action to dismiss the bankruptcy.
Just 10 minutes before the bankruptcy was filed, Downtown Aspen Investment, using its authority as the lender, replaced the manager of Aspen Legacy Holdings with its own, in a bid to stymie the bankruptcy filing, Christensen said.
“That’s not unusual,” he noted, adding that the lender has contended it also has the authority to veto the bankruptcy.
“That’s why we’re going to court,” Christensen said.
For now, the property’s listed price is $28 million – $13.5 million less than two years ago at this time.
“The economy has changed the property value, and we have a more recent appraisal of that,” Christensen said. “We have an appraisal that says it’s worth $28 million, and we’d like to get something like that.”
Mark Wyman of the Fleisher Co. remains the property’s listing agent.
“It has not been tough to show,” he said. “It attracts a great deal of attention.”
The three parcels sit next to each other in the downtown core. Aspen Legacy bought the 5,762-square-foot Benton Building, located at 517 E. Hyman Ave. and the former home of Huntsman Gallery, for $3.15 million in January 2003, according to the Pitkin County Assessor’s Office. In May 2005, Aspen Legacy acquired the 2,460-square-foot Little Annie’s building, located at 521 E. Hyman Ave., for $2.15 million, records show.