Mediation off table as Aspen Skiing Co. appeals ex-executive bankruptcy
Aspen Skiing Co.’s legal battle with a former executive over a bankruptcy has taken a new turn.
On Wednesday, Skico filed an opening brief in the U.S. Court of Appeals for the 9th Circuit, the next step in the firm’s bid to overthrow former senior executive Paul Cherrett’s bankruptcy, which he co-filed with his wife in August 2013 in California.
Skico’s latest move comes after the appellate court determined in January that the case didn’t qualify for its mediation program. Skico previously had lobbied, unsuccessfully, to the lower bankruptcy and bankruptcy appeals courts to dismiss the Chapter 7 filing.
Skico wants the case tossed because the Cherrett couple’s bankruptcy tries to absolve them from making good on a $500,000 loan provided to them by Skico. Skico loaned them the money to buy a condominium in Basalt to entice Paul Cherrett to move to the Roaring Fork Valley from Jackson Hole, Wyoming. The home loan, according to court papers, influenced his decision to take the job in which he served as Skico’s senior vice president of hospitality from April 2007 to June 2011.
In a related development Thursday, the Pitkin County Treasurer’s Office posted a notice of foreclosure on the 1,435-square-foot condo, located on Two Rivers Road. The condo is scheduled to go to a foreclosure auction July 1 if a note from another lender, for $417,000, isn’t cured by June 30, according to the Treasurer’s Office. The Cherretts bought the condo for $995,000 on June 15, 2007.
Skico, meanwhile, has declined to discuss the litigation, and Cherrett’s law firm hasn’t return phone calls seeking comment.
But Skico’s opening brief details its stance to have the bankruptcy dismissed. Skico attorneys contend the two bankruptcy courts’ support of the Cherretts’ Chapter 7 is an “unusually favorable ruling.”
That’s because the two courts’ conclusions are at odds with case law that would have deemed the Cherretts’ debts personal. Were that the case, the bankruptcy would be void and the couple would be obligated to pay off the $500,000 loan to Skico; Skico claims the Cherretts currently make enough earnings to satisfy the debt but are using the bankruptcy to renege on it. Skico also claims the Cherretts make too much to qualify for bankruptcy protection.
The Cherretts’ bankruptcy lists their debts at nearly $1 million. The bankruptcy courts said their debt was business related — which qualifies them for bankruptcy protection — because they took out the loans to buy the condo so Paul Cherrett could relocate and work for Skico.
“When the debt was incurred, (Paul Cherrett’s) intention was to live in the residence,” Skico attorneys wrote in this week’s brief. “(He) occupied the residence for four years thereafter and did not use it for business.”
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