Dancing Bear’s fate in judge’s hands | AspenTimes.com

Dancing Bear’s fate in judge’s hands

Rick CarrollThe Aspen TimesAspen, CO Colorado

Janet Urquhart/The Aspen TimesThe fate of the unfinished portion of the Dancing Bear in Aspen awaits a bankruptcy trustee's decision.

ASPEN – A federal bankruptcy judge will soon decide the direction of the Dancing Bear fractional-ownership development, an Aspen project that seemingly mirrors the struggles faced by developers during the national credit crunch. The owner of the Dancing Bear fractional ownership development, with the support of four creditors, is fighting to reorganize its debts in Chapter 11 bankruptcy, while two of the project’s key lenders have it eyed for foreclosure. The two lenders claim that the involuntary bankruptcy by DB Capital Holdings, the Aspen-based owner of the project, was done in bad faith and lacks any credible reorganization plan. DB Capital, however, has argued that the two lenders are playing hardball because “they want the project.”The arguments come after DB Capital Holdings went bankrupt earlier this year, but a judge dismissed the Chapter 11 plan on June 21. Four days later, DB Capital was pushed into a voluntary Chapter 11 bankruptcy by five of its creditors. One of those creditors, professional golfer Fred Funk, withdrew from the proceedings.Both sides recently filed written closing arguments in the U.S. Bankruptcy Court in Denver concerning the fate of the project, which was originally billed as a two-phase development. Only the first phase, located at the corner of Monarch Street and Durant Avenue, has been completed. It continues to operate. Construction on he second phase, at the old Chart House location, came to a halt last year when the project’s financing dried up. The current bankruptcy will be decided on by U.S. Bankruptcy Judge Michael E. Romero, who dismissed the original bankruptcy. Creditors Aspen HH Ventures, which invested $6 million in the project, along with West LB, the Germany-based lender that injected $56 million into the development, have maintained the involuntary bankruptcy was filed in “bad faith” by the creditors of DB Capital Holdings LLC. Aspen HH and West LB are pushing to put the property into foreclosure.Aspen HH claims DB Capital “has no plans for reorganization,” court papers allege. Aspen HH also claims that DB Capital has made no progress on the second phase of the project “for more than a year and half.”Additionally, Aspen HH argues the value of the property is “substantially less” than the $56 million owned by West LB., and that Thomas DiVenere, the principal of DB Capital, has a “far-fetched plan” to develop the second phase using $31 million from “uncommitted sources.””Mr. DiVenere has wasted West LB’s and his investors’ money by squandering untold hundreds of thousands of dollars to purchase an employee housing unit for his friends to live in, to buy membership in a private-jet club, to join the exclusive Roaring Fork Cub, and to pay for his own on-site maid services, grocers, and other goods and services,” Aspen HH claims.In response to Aspen HH’s allegations, the creditors claim that Aspen HH’s strategy has been to publicly portray Mr. DiVenere “as a dishonest self-aggrandizing developer, expecting that such allegations would pave the way for them to join West LP and reap returns at the expense of the petitioning creditors.”The creditors also claim that DB Capital has a feasible plan to emerge from bankruptcy and begin construction on the second phase within the next four years. The Dancing Bear project remains in receivership under Jim DeFrancia, who’s been overseeing the projects finances since May. rcarroll@aspentimes.com