Aspen homeowner avoids foreclosure by going bankrupt
November 22, 2018
A limited liability company that owns an Aspen home filed for bankruptcy earlier this month, staving off a foreclosure sale that would have been held on the front steps of the Pitkin County Courthouse.
Texas-based Tiel Trust I declared Chapter 11 bankruptcy Nov. 6, one day before the Pitkin County Treasurer's Office's scheduled auction of the home through a foreclosure sale that District Judge Chris Seldin approved Oct. 30, court records show.
Filing Chapter 11, which allows a business to remain solvent while it reorganizes its debts with the bankruptcy court's assistance, bought Texas-based Tiel Trust more time with the foreclosure process.
"It has been stayed (placed on hold) until the bankruptcy gets lifted per the courts," said Syd Tofany, the county's chief deputy public trustee, on Wednesday.
The riverfront, single-family home, located at 42400 Highway 82 toward Independence Pass, had an advertised sale price of $11.6 million as recently as Oct. 2017, with marketing materials calling it a "stellar property" that was "handpicked by the president of the Aspen Institute to build a river house in the 1970s."
In May, however, the holder of three loan notes on the property — 42400 Highway 82 Acquisition LLC — initiated three foreclosure proceedings in Pitkin County District Court.
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42400 Highway 82 Acquisition LLC is the owner of three notes it obtained from the original lender; the owed balances are in the amounts of $525,000, $644,385 and $2.2 million, according to the Treasurer's Office.
On the eve of the foreclosure auction — the same day Tiel Trust went bankrupt — the lender placed three separate bids amounting to $3.7 million on the property, more than the owed total balance of nearly $3.4 million because of interest and fees.
The bankruptcy negated those bids, however.
"It should be stayed typically, as a matter of law, but I can't comment on the bankruptcy," said David McConaughy of the Aspen law firm Garfield & Hecht PC, which represents Tiel Trust.
Denver attorney Keri Riley of the Denver firm Kutner Brinen PC, which filed the bankruptcy Tiel Trust's behalf, could not be reached for comment this week. The attorney representing 42400 Highway 82 in the foreclosure litigation, Anne Marie McPhee of Oates, Knezevich, Gardenswartz, Kelly & Morrow PC, also could not be reached.
The bankruptcy filing also came after Tiel Trust's efforts to dismiss the foreclosure actions in court fell flat.
Attorneys for Tiel Trust filed a brief in July in Pitkin County District Court, saying that lender Post Oak Bank assigned the note "to a nonexistent company" in May. That company, which also is the foreclosing party known as 42400 Highway 82 Acquisition LLC, had failed to demonstrate that it actually holds the notes, Garfield & Hecht attorney Jason Buckley wrote, arguing it "cannot prove that it is a real party in interest to foreclose against (Tiel Trust's) property."
In an August response, McPhee countered that Tiel Trust didn't dispute it had defaulted on the loans, and the LLC was in good standing in the state of Delaware but had simply changed its name.
The end result was Judge Seldin's issuance of three orders — in association with the three foreclosure actions — authorizing the sale.
With the bankruptcy proceeding underway, Toffany explained that the foreclosure actions could resume should the Chapter 11 be lifted under the order of the bankruptcy court.