Business Monday: Aspen Club, creditors agree to bankruptcy dismissal
Attorneys for the bankrupt Aspen Club & Spa filed court papers Friday night saying they have agreed with their creditors to dismiss the Chapter 11 reorganization case dating to May 2019.
The proposed order to dismiss awaits the signature of U.S. Bankruptcy Judge Joseph A. Rosania, who July 22, following a five-day hearing, denied the club’s proposal for $140 million in what’s called “exit financing.” Club attorneys and president Michael Fox had said the money, which would have been lent by Florida-based EFO Financial Group, would have allowed them to emerge from bankruptcy, restart the stalled redevelopment project, and pay over $100 million in debt to contractors, loan-note holders and other creditors.
With that exit plan no longer an option, the judge gave the club until Friday to file another confirmation plan.
The Aspen Club, however, informed the court on the evening of the deadline that its creditors are amenable to dismissing the bankruptcy case and could pursue other avenues — such as appointing a receiver to take over the property’s financial matters or start foreclosure proceedings.
In court papers, the Aspen Club recognized that dismissing the bankruptcy case also will trigger a 20% default interest rate on a previous court-approved loan of $7.65 million it received through several installments from EFO Financial Group of Florida.
As part of the negotiations, GPIF Aspen Club, a loan-note holder that claims Aspen Club owes it between $35 million and $40 million, “is willing and able to cure the default” and satisfy the EFO’s loan in full, according to the proposed order dismissing the case.
There also is pending litigation in Pitkin County District Court over more than $26 million in mechanics’ liens that subcontractors have attached to the property. The bankruptcy dismissal agreement stipulates that the county district court would be the future venue for resolving matters concerning the club’s debts to its contractors, who abandoned job site at 1450 Ute Ave. in September 2019 because they had not been paid.
The construction project site remains preserved, with 15 of its townhomes between 60% and 80% complete, six condominiums 30% complete, and the commercial component 30% complete, according to filings in the bankruptcy case.
Included in the project is the remodel of the 40,000-square-foot Aspen Club & Spa building, the construction of a 54,000-square-foot lodge with 20 timeshares, and 12 multi-family affordable-housing units.
Aspen Club & Spa and The Aspen Club Redevelopment Co. declared separate bankruptcies in May 2019. The cases have been jointly administered.