Aspen developer looks for exit strategy from bankruptcy |

Aspen developer looks for exit strategy from bankruptcy

ASPEN – The development company seeking approval to build a hotel at the base of Aspen Mountain’s Lift 1A is disputing its lender’s claim that the property is losing value and therefore foreclosure proceedings should resume.

Aspen Land Fund II LLC filed a response last week to Alpine Bank’s earlier motion to dismiss the firm’s Chapter 11 bankruptcy case.

Alpine Bank claimed in federal bankruptcy documents filed in Denver that it is not adequately protected because the value of Aspen Land Fund’s property on South Aspen Street isn’t worth the amount owed.

The bank obtained an appraisal of the vacant property, which as of Nov. 20 lists its value at $19 million, assuming current land-use approvals. That property is being used as collateral for the company’s $22.5 million promissory note to Alpine Bank.

Aspen Land Fund entered into a business loan agreement with the bank in March 2008 to fund the development of either 17 townhomes, which have already been approved, or a hotel, which is currently going through the city’s approval process.

In its response to the motion to dismiss, Aspen Land Fund argues that the property will have significantly higher value if it’s able to obtain the necessary entitlements to develop a hotel.

The company’s response, filed through its Denver attorney, Harvey Sender, also states that it doesn’t necessarily object to the bank’s motion to dismiss because it may further the firm’s effort to restructure its business.

John Sarpa, a principal in Aspen Land Fund’s parent company, Newport Beach, Calif.-based Centurion Partners, said the firm is preparing an exit strategy to emerge from bankruptcy.

“We are working on a mutually beneficial way to exit the process, which would include the dismissal of the case,” he said, adding as the process moves forward the company hopes to do it with the bank’s acquiescence.

Aspen Land Fund II filed for bankruptcy protection Sept. 25 in a move to prevent another company from acquiring the land and the development rights on South Aspen Street.

The move was in response to Alpine Bank entering into a contract with an unknown third party to sell its loan on the project even though the firm had been in negotiations to extend the terms of the note.

Chapter 11 allows the company to reorganize its finances and prevents Alpine Bank from foreclosing on the property. In the meantime, Sarpa and his partners are raising new capital in an effort to continue planning and building the hotel, known as the Lodge at Aspen Mountain.

Alpine Bank holds additional security on its loan with Aspen Land Fund in the form of a CD valued at nearly $1.6 million. The value of the property and the CD is roughly $20.6 million. The bank claims it is left unsecured by $4.5 million, according to court documents.

The property also is encumbered by a $4.9 million junior lien to South Aspen Real Estate LLC, which was financed by Goldman Sachs. Alpine Bank claims Aspen Land Fund is unsecured on that lien as well.

Alpine Bank claims that the total debt is nearly $29.9 million – 57 percent more than the appraised value of the property.

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