Judge delays confirmation
By Joseph T. O’Connor Explorebigsky.com Editor
BUTTE – Three names were scrawled on Ross Richardson’s list of qualified bidders for The Club at Spanish Peaks’ assets auction on the morning of June 3. Spanish Peaks Dynasty, Satterfield Spanish Peaks Acquisition and CrossHarbor Spanish Peaks Acquisition, LLC were the only three bidders who came forward for the 5,300-acre private ski and golf community, mired in Chapter 7 bankruptcy court since October 2011.
At 9 a.m., interested parties, their lawyers and Spanish Peaks homeowners shuffled into the Federal Courthouse in Butte for the long-awaited auction. James Dolan, who co-founded The Club at Spanish Peaks in 2004, flew in for the auction from Pittsburg to represent S.P. Dynasty. Sam Byrne, co-founder of CrossHarbor Capital Partners, CHSPA, LLC’s parent company, was in from Boston. And Tommy Satterfield occupied the front row during the auction, representing SSPA. When the smoke cleared, only one group was left standing.
Richardson, the trustee for the Chapter 7 bankruptcy case, awarded the highest bid to Cross Harbor Spanish Peaks Acquisition, LLC, after the Boston-based company outpaced the competition with a $26.1 million bid, subject to the terms of the Asset Purchase Agreement. SSPA was named backup bidder with a bid of $26,000,000, in the event CHSPA, LLC fails to close on the transaction.
CrossHarbor Capital Partners, LLC, a majority shareholder at the Yellowstone Club, put together CHSPA, LLC for the auction and beat out stalking horse bidder SSPA as well as S.P. Dynasty, but not before the day-long auction and subsequent confirmation hearing lasted into the early evening.
The teams of lawyers disagreed over the APAs, resulting in a delayed start. Judge Ralph Kirscher took the bench at 10:30 a.m., and for the next hour and 45 minutes, lawyers presented issues surrounding the APAs.
At 12:15 p.m., Richardson signaled for the auction to begin. He laid out ground rules, noting that that qualifying bidders must have submitted a cashier’s check for $2,260,125, or 10 percent of the stalking horse bid. During the auction, no bids could be retracted, and bids were to be submitted in $100,000 minimum increments.
The live auction began with Satterfield’s stalking horse bid of $22,050,000, and Matt Kidd, a principal at CrossHarbor, immediately raised his paddle and the bid to $22,601,250.
The battle for highest bid alternated leaders between CHSPA, LLC and Satterfield S.P. Acquisition, S.P. Meanwhile, Dynasty tried to combine its bids, offering just over half in cash plus the balance in the form of a credit bid; the trustee didn’t accept its three attempts at this offer.
At 1:24 p.m., Richardson announced CHSPA, LLC’s cash bid of $26.1 million was the highest submission.
Sam Byrne sat next to Kidd during the bid war. Byrne was otherwise stoic during the bidding, but once Richardson said, “sold,” Byrne smiled and shook hands as lawyers and Spanish Peaks homeowners in attendance congratulated him.
But the deal was not yet complete.
A confirmation hearing was set for 2:30 p.m., wherein the judge would rule on the sale in the bankruptcy auction, but further APA disagreements between lawyers pushed back the proceeding. At 4:11 p.m., Kirscher emerged from his quarters and listened as lawyers representing Satterfield and S.P. Dynasty raised issue with the APA.
Kirscher asked the respective groups to submit notices of these issues, and said he hopes to make a ruling within the next couple weeks.
Dolan, who sat quietly with his two sons and team of lawyers in the second row after the auction, took the stand for S.P. Dynasty near the end of the confirmation hearing, answering questions about a ground lease for a contentious parcel of property atop Andesite Mountain, on which sits the Pinnacle Restaurant. Dolan has leased the property for $1,000 per year since December 14, 2007.
The lease, written out for a term of 99 years, has been an issue in the case because former secured lender CitiGroup sold its shares to Spanish Peaks Acquisition Partners in 2011, and it’s unclear whether that sale would negate the deal Dolan had with CitiGroup.
Stepping into the back seat of a black SUV after court adjourned, Dolan said the case was “pretty much a done deal.”
“[Byrne] is the new king of the valley,” Dolan said. “I wish him luck.”
This is an ongoing story in the Weekly, which will feature subsequent installments as information becomes available.