Aspen Club puts out amended plan for bankruptcy exit
The Aspen Club and Spa has rolled out a reorganization plan that calls a buyout the worse possible outcome for the creditors owed more than $100 million in its bankruptcy case, with its chief goal to get $140 million in financing to build what it calls a “world-class club and spa facility.”
The plan also calls for Michael Fox, the president of The Aspen Club, to remain at the helm to “oversee the day-to-day operations” while being “subject to the oversight of the new board,” according to The Aspen Club’s reorganization plan.
The Tuesday filing marked the second time The Aspen Club, through Denver law firm Markus Williams Young & Hunsicker LLC, has produced a reorganization plan in its attempt to satisfy its creditors, which, generally speaking, must confirm the plan in order for the bankruptcy court to accept it. The original version was filed in September.
A disclosure statement to creditors, also filed last week, summarizes a plan that puts the mechanics’ lienholders at the top of the pecking order of payback priority. Combined, those mechanics’ lienholders with secured claims would receive $26.8 million under the reorganization plan.
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Next in line is note-holder GPIF Aspen, which The Aspen Club’s attorneys have accused of making a play on its property. GPIF Aspen has secured claim for $34.1 million, though The Aspen Club plan says the amount is over the actual debt by about $2 million.
Revere High Yield Fund stands third, with a claim of $12.3 million.
Another $35 million in claims, some of which are unsecured, are spread out among what the plan calls 10 “classes” of creditors.
The Aspen Club embarked on major redevelopment project at its 1450 Ute Ave. address in 2015 with plans to complete it in 2018. But in the summer of 2017, after FirstBank, the original lender on the note GPIF Aspen now holds, withheld the second installment, in the amount of $15 million, on a two-phase construction loan to the club. FirstBank already had lent $30 million to the club.
“Despite verbal assurances from the regional president of FirstBank, who was intimately involved in the loan and overseeing the project, that the second phase of the construction loan would be funded, FirstBank declined to fund the second phase of $15,000,000,” the plan said. “A few months later the regional vice president was no longer at First Bank.”
With FirstBank’s $15 million off the table, The Aspen Club’s financial health began to deteririate, the plan said.
“Debtors were materially impaired with respect to their ability to finance the construction of the project, pay vendors, contractors, and deliver completed units to those certain third party bonafide purchasers in accordance with their contracts. These events cascaded and by September 2017, construction on the project was halted,” the plan said.
The project site currently is being preserved, with 15 of its townhomes between 60% and 80% complete, six condominiums 30% complete, and the commercial component 30% complete, according to the plan.
Upon completion, The Aspen Club will include what the plan called “a private membership health and performance center, offering state-of-the-art fitness, sports medicine, and lifestyle education programming, along with a world-class club and spa. In addition, and as part of the project, the debtors intend to sell and manage the surrounding townhome residences and club residences as monthly fractional deeded ownership interests with the right, but not the obligation, to participate in a rental pool managed by the debtors.”
The plan also addresses the personal bankruptcy of Fox, who declared individual Chapter 11 in September. Fox reported an annual salary of $274,428.
Under the new plan, Fox would earn $32,000 a month until the development is completed. However, $13,000 of his monthly compensation would be deferred until all of the secured creditors are paid in full, the plan said. Fox also would receive a $150,000 bonus upon the project’s completion.
Bob Daniel, the construction supervisor, would make $35,000 under the plan receive a $200,000 completion bonus.
The Aspen Club & Spa and The Aspen Club Redevelopment Co. declared their respective Chapter 11 bankruptcies on May 16 and May 17, 2019. The cases were consolidated May 20, and have been jointly administered through the bankruptcy court since then.
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The Aspen City Council directed staff to work with restaurants and retail shops to find out how much interest there is in expanding into the public right-of-way. Use of interior space will be limited for an unknown time so businesses will be given the opportunity to use public right-of-way.