By Joseph T. O’Connor ExploreBigSky.com Editor
BIG SKY – Assets in The Club at Spanish Peaks may finally be up for sale, after more than a year of gridlocked debate and fears of continued delays or foreclosure by secured lenders.
Entities owning the club filed for Chapter 7 bankruptcy in October 2011, and the resort closed at that time, laying off more than 100 employees. On Dec. 4 of this year, a lawyer representing some 140 members of a Spanish Peaks ad hoc group sent an email explaining the news of the sale.
The secured lenders, consisting mainly of a consortium of banks, filed on Dec. 3 documents with Montana’s bankruptcy court, according to the email by attorney J. Thomas Beckett. The filing included a plan to sell assets in The Club at Spanish Peaks to the highest bidder.
“The car is out of the garage,” said a member of the ad hoc group’s 12-member steering committee, who wished to remain anonymous. “After a year, we finally have a process outlined.”
This process, described in court documents attached to the email, highlighted agreements between Ross Richardson, the Chapter 7 trustee, and the secured lenders. It included an estimated timeline that set June 1, 2013 as a closing sale date.
The lenders recommended appointing Eastdil Secured, an international real estate investment company based out of New York City, to market for and represent the property moving forward. The bankruptcy court approved Eastdil on Dec. 6, and interested parties have two weeks to file an objection, according to court documents.
Eastdil will begin sending out teasers to potential buyers in January. This list, or pitch book, will include between 100 and 200 interested parties.
“We don’t know who is going to bid on this,” the steering committee member said, adding that hedge funds and some wealthy individuals will be listed in the pitch book.
Members of the Spanish Peaks ad hoc group, who each paid $1,000 to fund legal council and to keep abreast of developments, want to have a say in who walks with the final purchase.
“We want a viable club,” the source said. “That’s what people bought into.”
Ad hoc members anticipate fewer than five serious bidders by the proposed bid deadline in mid-February. Richardson, the trustee, is expected to select the best offer in early March.
The face value on the Spanish Peaks debt is more than $122,000,000, and the club will go to the highest bidder, but if a potential client approaches lenders with $20 million, cash in hand, they will accept it, according to the source.
Because of longstanding issues surrounding the bankruptcy, “[the secured lenders] are willing to take their lumps.”
The $20 million was set as a floor price and, according to court documents, Richardson will receive a $750,000 “carve out” from the secured lenders once a sale is finalized. The carve out will come out of the total sale of the property, and will pay court and lawyer expenses and administrative costs, as well as Eastdil for its work initiating a sale.
If the property sells for more than $20 million, secured lenders will add 2 percent to any additional sale money to go toward the carve out. If no one bids at least that much, the lenders can accept the lower bid or retain the property.
News of the potential Spanish Peaks sale is a relief to many involved in the process.
“This [sale] could have been three or five years [out],” the source said. “It’s nice there is a resolution [coming]. It may not happen until next October, but at least there’s light at the end of the tunnel.”
This is an ongoing story in the Weekly, which will feature subsequent installments as information becomes available.