Judge tosses out Dancing Bear-Aspen bankruptcy
June 22, 2010
ASPEN – A bankruptcy judge Monday dismissed a Chapter 11 reorganization by the owners of Dancing Bear Residences-Aspen development, meaning the legal disputes surrounding the troubled real estate project will play out in state court instead.
Judge Michael E. Romero’s ruling came after a hearing Monday in the U.S. Bankruptcy Court in Denver, where DB Capital Holdings filed for Chapter 11 on May 27.
The ruling was in response to a motion made by Aspen HH Ventures, which invested $6 million in the project, to dismiss the bankruptcy. Aspen HH Ventures had claimed the bankruptcy was filed “in bad faith,” and done to fend off receivership proceedings in Pitkin County District Court.
That’s the venue in which Aspen HH Ventures and another investor, WestLB, have sued DB Capital Holdings, contending that DB Capital defaulted on loans made to finance the project’s construction.
In its bankruptcy filing, DB Capital holdings reported that it owes $56 million to WestLB, the Germany-based lender that financed most of the project.
The judge’s written ruling was not available Monday. Attorneys for DB Capital Holdings – Joseph Krabacher of Aspen and Robert Padjen of Denver – did not return telephone messages seeking comment.
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The bankruptcy dismissal marks the latest development in the financial problems of the Dancing Bear, which 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, at the old Chart House location, stopped when financing dried up.
In May, Aspen resident James DeFrancia was appointed as a receiver for the property, meaning he handles all of the Dancing Bear’s finances. Prompted by Aspen HH Ventures, the receivership is intended to wind up and liquidate DB Capital’s business and affairs.
DeFrancia’s role as receiver was thrown into question because of the bankruptcy, but that’s no longer the case, he said Monday.
“What it [the bankruptcy dismissal] means is that everything returns to the status quo, and that I continue as receiver and as the fully comprehensive authority for the property,” he said.
DeFrancia said he expects resolving the legal dispute to take at least several months.
“And in the meantime the property is operating on a normal basis, and it’s fiscally sound,” he said.