Dancing Bear bankruptcy survives judge’s scrutiny | AspenTimes.com

Dancing Bear bankruptcy survives judge’s scrutiny

Rick Carroll
The Aspen Times
Aspen, CO Colorado

ASPEN – The Dancing Bear Residences development in Aspen was given clearance by a federal judge Monday to remain in bankruptcy, despite efforts by one of its corporate members to throw out the Chapter 11 reorganization plan.

Denver bankruptcy Judge Michael Romero, in a 12-page order, ruled that it’s in the best interest of the debtor and creditors for DB Capital Holdings – the corporate entity that owns the embattled project – to remain in bankruptcy.

Romero, who dismissed DB Capital’s original bankruptcy on June 21, said the second one – an involuntary Chapter 11 filed three days later by five creditors, on June 24 – so far meets the criteria to reorganize its debts that exceed more than $60 million.

The judge’s ruling came after Aspen HH, an Illinois limited liability company, filed a motion to dismiss the involuntary bankruptcy. As one of two members of DB Capital, Aspen HH argued DB Capital’s involuntary bankruptcy was actually engineered by Tom DiVenere, a partner with Dancing Bear Management, the other member of DB Capital.

Aspen HH also contended the involuntary bankruptcy was a tactic to ward off foreclosure proceedings in Pitkin County prompted by both Aspen HH and West LB, a Germany-based lender that infused $56 million into the project. Another $6 million came from Aspen HH, according to court documents.

Additionally, Aspen HH alleged the involuntary bankruptcy was a strategy to take the project out of receivership and stall litigation proceedings in Pitkin County District Court, where DiVenere is being sued for alleged mismanagement of the project.

The Dancing Bear fractional-ownership 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. It continues to operate. Construction on the second phase, at the old Chart House location, came to a halt last year when the project’s financing dried up.

“Chapter 11 will give us some breathing room,” said New York attorney Heidi Sorvino, DB Capital’s lead counsel in the bankruptcy proceedings. “Eventually they’ll be able to get financing in place to put up the second building.

“That’s what Tom DiVenere wants to do.”

The creditors that pushed for the involuntary bankruptcy include G.D.B.S. at Snowmass Village, which claims it’s owed $54,000 for a lease in Basalt; California-based Realty Financial Resources Inc. ($25,000); William Dennis of Jacksonville, Fla. ($300,000); and architectural firm O’Bryan Partnership of Frisco ($11,132).

A fifth creditor, PGA golfer Fred Funk, who also was an investor in the project, claims he was owed $354,166 for marketing and promoting the project. Funk, however, withdrew from the bankruptcy proceedings in August.