Aspen’s Dancing Bear goes bankrupt |

Aspen’s Dancing Bear goes bankrupt

Rick CarrollThe Aspen TimesAspen, CO Colorado

ASPEN – The owners of the Dancing Bear Residences-Aspen development have filed for Chapter 11 bankruptcy protection in an effort to regain control of business operations that have been under the reins of a court-appointed receiver. The bankruptcy, listed under the name of Aspen-based DB Capital Holdings, was filed May 27 in U.S. District Court in Denver. Bankruptcy papers list DB Capital’s liabilities at more than $60 million, including nearly $56 million to Germany-based WestLB, the senior lender that financed most of the Durant Avenue project.The Chapter 11 filing would allow DB Capital to remain solvent while reorganizing its debts. It lists such debtors as California-based Cappello Capital Corp. ($750,000), Aspen law firm Klein, Cote & Edwards ($71,000), and professional golfer Fred Funk ($708,500), who also invested in the project.But on Thursday, Illinois-based Aspen HH Ventures, which injected $6 million into the project, entered a motion to dismiss the bankruptcy, claiming it was filed “in bad faith.”Before the bankruptcy filing, Aspen HH Ventures, along with WestLB, had been involved in a legal dispute with DB Capital Holdings in Pitkin County District Court. In a lawsuit filed in March, both Aspen HH Ventures and WestLB have contended that DB Capital is delinquent on loans made to finance the project’s construction. The dispute resulted in the March 12 court appointment of Aspen resident James DeFrancia to act as a receiver for the property, which means he handles all of the Dancing Bear’s business dealings, and has unfettered access to its financial records. Spurred by Aspen HH Ventures, the receivership is intended to wind up and liquidate DB Capital’s business and affairs. Less clear, however, is the extent of DeFrancia’s role because of Dancing Bear’s bankruptcy.DeFrancia said Thursday that until the bankruptcy is finalized, he will continue to operate in his role as receiver. “As the receiver who’s appointed by the district court I continue to be in control of the property until the status of the bankruptcy is resolved,” he said. DeFrancia said that once he was notified about the bankruptcy, he contacted WestLB. Dancing Bear’s Aspen attorney, however, said DeFrancia currently has no authority as a receiver because of the bankruptcy.”Once it goes into bankruptcy his powers are essentially suspended,” said Joe Krabacher.Krabacher said the bankruptcy was filed because having the property placed in receivership “would not benefit the creditors and equity owners, when considered in the context of how claims and debts would be paid on a distressed real estate project.”He added that a deal had been worked out with a bank that would have resulted in most of DB Capital’s unsecured creditors being paid, but the bank withdrew the offer once the property went into receivership. In any case, it appears the dispute between DB Capital Holdings, which is controlled by Florida developer Thomas DiVenere, and WestLB and Aspen HH Ventures will be played out in both Pitkin County District Court and Denver’s bankruptcy court.In its motion to dismiss the bankruptcy, Aspen HH Ventures claims that DB Capital Holdings filed for Chapter 11 in an effort to ward off receivership proceedings in Pitkin County District Court, where a hearing has been scheduled June 9 in front of Judge Gail Nichols. The day that Nichols scheduled the June hearing – May 27 – is the same day DB Capital went bankrupt.”This [bankruptcy] filing was wrongful, and this case should be promptly dismissed,” said Aspen HH Ventures’ motion to dismiss, which adds that DB Capital “has no assets and absolutely no prospect for rehabilitation.” The motion also claims DiVenere has mismanaged the Dancing Bear project and DB Capital’s assets. “In short, this case involves a classic example of a bad faith bankruptcy filing and abuse of the bankruptcy process, and for this reason alone this case should be dismissed,” AH Aspen Ventures’ motion says.The Dancing Bear project was billed as a two-phase development, but only the first phase, located at the corner of Monarch Street and Durant Avenue, has been completed. Construction on the second phase came to halt when financing dried up. The would-be 11-unit condominium project, located across Durant Street in the old Chart House spot, “is nothing more than an incomplete steel structure which sits abandoned and blighted in the heart of downtown Aspen,” says HH Aspen Ventures’ motion to

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