Carbondale lender wants Aspen landlord’s bankruptcy dismissed
July 6, 2010
ASPEN – A downtown landlord’s bankruptcy is being challenged by a Carbondale-based lender that claims the Chapter 11 move was filed in bad faith.
Downtown Aspen Investments LLC last week filed a motion to dismiss the bankruptcy by Aspen Legacy Holdings LLC, owner of the Hyman Avenue buildings occupied by Little Annie’s Eating House and the former Huntsman Gallery, as well as the parking lot at the corner of Hunter Street and Hyman.
It’s the latest development in the legal battle between Downtown Aspen Investments and Aspen Legacy.
Last month, a Pitkin County District Court judge was scheduled to rule on whether a receiver should be appointed to oversee all of the Aspen Legacy’s financial dealings. The hearing was prompted by Downtown Aspen Investments, which claims Aspen Legacy has defaulted on a $9.2 million loan it obtained in October 2008.
The hearing, however, was canceled after Aspen Legacy filed for bankruptcy protection June 23 in the U.S. District Court of Denver. Friday’s motion to dismiss suggests the bankruptcy filing was a ploy on Aspen Legacy’s part to frustrate the lender’s attempt to put the property in receivership.
The bankruptcy also is illegitimate because Downtown Aspen Investments claims it dismissed Edward Dingilian from his role as manager of Aspen Legacy before the bankruptcy filing was made, the motion contends. Dingilian had no authority to file the bankruptcy, according to the motion.
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“This case is a paradigmatic example of bad-faith filing. It was filed less than 24 hours before a hearing in Pitkin County where Mr. Dingilian’s misdeeds were to be publicly exposed,” according to the motion, which adds that “the bankruptcy was filed solely to thwart Downtown Aspen’s ability to obtain remedies in what really is a two-party dispute …”
Additionally, Dingilian, as manager, “misappropriated approximately $500,000 from [Aspen Legacy] and funneled his ill-gotten gains to family bank accounts under his control in New York,” the motion says.
In an interview with The Aspen Times last month, Aspen Legacy’s attorney, Shaun A. Christensen, said the bankruptcy would put Aspen Legacy in a better position than receivership, in which it would no longer have control of its finances.
Christensen said Aspen Legacy had planned to either refinance the property or sell it. The property currently is listed $28 million – $13.5 million less than two years ago at this time.
Aspen Legacy also is not making enough income from the property to stay current on its property tax payments, alleges the motion to dismiss, arguing that a reorganization plan is not feasible.
Currently, “the only income from the property is the ‘$10,000/month non-default lease payment from a restaurant [Little Annie’s] that leases space from [Aspen Legacy] which increased to $15,375/month as a result of [Aspen Legacy’s] defaults and the parking lot lease in the amount of $7,500 a month,'” the motion says. “This tiny cash flow is barely sufficient to cover [Aspen Legacy’s] tax and insurance obligations, and does not begin to meet the payments due under the loan.”