Aspen Club banking on Skype hearing for bankruptcy case
The coronavirus pandemic is the impetus of a dispute over how a pivotal hearing in the bankruptcy case of The Aspen Club and Spa will be conducted.
Florida-based lender EFO Financial has given The Aspen Club until April 30 to get a bankruptcy court judge’s approval of a $140 million loan the club would use to emerge from Chapter 11.
Without the loan, The Aspen Club won’t have a viable plan to exit bankruptcy and complete the fitness center and spa and residential development, its attorneys have said in court pleadings.
The five-day hearing is scheduled for later this month and will center around whether The Aspen Club’s plan is feasible enough to start paying back its creditors and resume construction at 1450 Ute Ave.
But there is a significant catch.
When Judge Joseph Rosania Jr. scheduled the confirmation-plan hearing for April 20, he made the call via a written order issued March 6.
His scheduling order came on the footsteps of the COVID-19 outbreak in the United States at a time when courts were operating under standard procedures. Then President Donald Trump declared the coronavirus a national emergency March 13, and a March 27 order from the U.S. District Court for the District of Colorado delayed all criminal and civil trials until at least May 1.
Pressured by the April 30 loan-agreement deadline with EFO Financial, The Aspen Club’s legal team wants the hearing to proceed over a video-conference call on the Skype platform.
EFO Financial won’t likely extend the loan agreement deadline “to such a later date if the confirmation hearing is indefinitely continued and the summer construction season is likely to be missed,” wrote Aspen Club attorney John Young in a March 30 motion asking to hold the hearing remotely.
With the proper safeguards in place “to ensure the purposes of live testimony are met as nearly and completely as possible,” a Skype hearing would effectively substitute an in-person hearing, Young’s motion said.
Holding a remote confirmation hearing, however, is a problem for two of The Aspen Club’s biggest secured creditors — loan-note holders GPIF Aspen Club, which is the successor to the $30 million loan FirstBank provided the club in May 2016, and Revere High Yield Fund, which lent $12 million to the club in June 2015.
Both creditors filed motions Monday arguing against holding the hearing over Skype and asked that it be rescheduled it to be held in person, in a courtroom, at a later date.
Revere’s motion said “viewing a flat screen via Skype for five days is mind numbing … it is likely impossible to determine if a witness is being coached or reading from a script on Skype,” and “it is impossible to obtain feedback or direction from counsel’s client during the examination of a witness.”
Revere and other creditors would be denied due process through a remote hearing as well, attorney Joel Laufer of the Denver firm Robinson, Waters and O’Dorisio, PC argued in a pleading.
Analyzing both the “demeanor” and “truthfulness” of witnesses and expert witnesses would be compromised by holding a hearing on Skype, Laufer argued, “which is essential to determining the credibility of the witness.”
Attorneys and parties also would not be able to “share information or share notes” during a remote hearing, the motion said.
GPIF’s motion also said the hearing is unfeasible because of on “a more human level, participants may have child care responsibilities or significant others with work-from-home obligations necessitating sharing child care responsibilities since in most cases outside help is no longer available. Likewise, many individuals are sharing home office resources with family members also working from home. These concerns may be minimal in a 60 minute hearing … or even a one day hearing, but for eight hours a day, five days in row, they are tangible and should be respected. Unfortunately for all of us, this is the new reality.”
Through Houston attorney Jason Cohen, GPIF’s motion also argued that EFO “can extend their own arbitrary financing deadline if they desire,” while The Aspen Club has received multiple deadline and hearing extensions over the case of its bankruptcy proceedings.
A hearing is scheduled Friday to determine whether the confirmation-plan hearing can be held April 20 over Zoom.
The Aspen Club and Spa and The Aspen Club Redevelopment Co. declared their respective Chapter 11 bankruptcies on May 16 and 17, 2019. The cases were consolidated May 20, and are being jointly administered through the bankruptcy court.
According to its confirmation plan that awaits approval, the finished Aspen Club would include “a private membership health and performance center, offering state-of-the-art fitness, sports medicine, and lifestyle education programming, along with a world-class club and spa. In addition, and as part of the project, the debtors intend to sell and manage the surrounding townhome residences and club residences as monthly fractional deeded ownership interests with the right, but not the obligation, to participate in a rental pool managed by the debtors.”
The project includes a remodel of the 40,000-square-foot Aspen Club and Spa building, the construction of a 54,000-square-foot lodge with 20 timeshares and 12 multi-family affordable-housing units.
The Aspen Club’s project site currently is being preserved, with 15 of its townhomes between 60% and 80% complete, six condominiums 30% complete, and the commercial component 30% complete, according to court filings.
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