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Business Monday: Judge wary of St. Regis play on Aspen Club

St. Regis Aspen Resort
Aspen Times file

A judge recently gave a chilly reception to the overture made by Elevated Returns, which owns 81% of the St. Regis Aspen, to buy the bankrupt Aspen Club’s assets and debts for $70 million in a cash-only deal.

Referring to the proposal as “basically a foreclosure” that would pay off the top three secured creditors — GPIF Aspen Club, Revere High Yield Fund LLP and Gould Construction, which combined hold $50.5 million of the club’s debt — U.S. Bankruptcy Court Judge Joseph G. Rosania Jr. called it a deal that would “chop everybody else out.”

The Aspen Club has about $95 million in debt on the 1450 Ute. Ave. property, another $25 million owed to subcontractors and contractors, as well as other monetary obligations.



Work on the club’s major redevelopment project has been suspended since autumn 2017 when the club’s financing went dry.

Under Elevated Returns’ proposal, it would get the inside track on the bidding process with an initial offer of $70 million in its role as a so-called stalking horse bidder. An auction would be triggered if another suitor placed a bid of at least 110% of the original purchase price, according to the proposal.




GPIF Aspen Club, which acquired FirstBank’s loan to the club, is the top secured lender with a claim for about $35 million. It was GPIF that introduced Elevated Returns’ proposal to the bankruptcy court in September, but Rosania Jr. said he won’t allow competing offers during what’s called an “exclusivity period” for the Aspen Club to hammer out a reorganization plan that its creditors can support.

The judge’s remarks came during a hearing Nov. 6 in the U.S. Bankrupt Court in Denver — marking the cases’s sixth hearing — and are part of a transcript that was attached to an exhibit filed in the case last week.

Joint debtors The Aspen Club and Aspen Club Redevelopment Co. filed their first reorganization plan Sept. 13. They sought the court’s permission Sept. 16 for a $140 million exit loan that would be provided by Florida-based EPO Financial, which already has floated the club just over $4 million to stay solvent while it’s bankrupt.

Without that exit loan, The Aspen Club’s future under its current ownership — led by Aspen resident Michael Fox — does not appear possible.

GPIF is contesting both the reorganization plan and the club’s request for an exit loan because it says Fox and the club’s ownership have demonstrated they aren’t capable of getting the project back on track, while their plan lacks the creditor’s confidence.

The judge has not yet ruled on the exit financing motion, but he denied GPIF’s motion for relief from an automatic stay that precludes it from filing a competing reorganization plan. Rosania Jr. made clear that he believes GPIF’s endgame is to get the property out of the current club’s ownership.

“GPIF is not in this case for the interest on the loan,” he said. “It’s in the case to get the property. So it’s a play.”

The judge also suggested GPIF’s persistent objections to the Aspen Club’s reorganization strategy are wearing thin.

“And, as Shakespeare said, GPIF, ‘thou protest too much.’ Your protestations of being a regular creditor just wanting to get paid your principle-in-interest are far too excessive to believe.”

Since the judge made his statement, GPIF has taken measures to appeal the ruling.

In the meantime, the Aspen Club has until Friday to file an amended plan of reorganization with the bankruptcy court, with objections due by Dec. 6. An evidentiary hearing is scheduled Dec. 18.

“So I’m going to exercise my discretion, give the debtor another chance to come back with a confirmable plan,” the judge said, adding that “I’m not ruling out that a sale may be appropriate in the future.”

The Aspen Club’s amended reorganization plan, which will detail how the debtors would pay off the creditors, would require creditor approval by Jan. 13.

“One thing about this case is there are a lot of numbers flying around,” the judge said. “There are projections and budgets and objections, and so it’s taken the court pretty much everything I have to understand the case and to try to render a fair ruling.”

The Aspen Club declared Chapter 11 bankruptcy on May 16; the next day, its wholly owned subsidiary, Aspen Club Redevelopment Co., also filed Chapter 11. The court has consolidated both cases.

The judge called it a “large complex case”

“It’s a significant asset,” the judge said. “It’s quite unique, quite interesting. And so both parties have brought me along for the ride.”

Some of the redevelopment project is partially completed, while other aspects have not started. The project includes a remodel of the 40,000-square-foot Aspen Club & Spa building, the construction of a 54,000-square-foot lodge with 20 timeshares, and 12 multi-family affordable-housing units.

rcarroll@aspentimes.com