Note holder bails Aspen Club in insurance pickle
A United States bankruptcy judge ruled Friday in favor of interim financing for The Aspen Club after it learned its insurance company would not be renewing its coverage past June 1, according to court documents.
GPIF Aspen Club, which already is owed nearly $34 million by the bankrupt Aspen Club Redevelopment Property LLC and The Aspen Club & Spa, both of which declared Chapter 11 in May, agreed to provide a $300,000 loan to cover insurance costs, according to bankruptcy court records. U.S. Bankruptcy Judge Joseph G. Rosania Jr. approved the agreement after a hearing Friday.
Attorneys for The Aspen Club wrote in court filings that Zurich, its carrier, was terminating its general coverage as well as coverage on the club’s redevelopment project. Attorneys said that the club was “unexpectedly” notified of the termination after it motioned the bankruptcy court May 22 for approval of $6.25 million in what’s called “debtor-in-possession financing,” or DIP financing, from EFO Financial Group LLC of Naples, Florida. The motion also said the club could be seeking up to $110 million from EFO Financial as part of its exit from bankruptcy. That motion is pending before Rosania with a hearing set June 19 in Denver.
“[The Aspen Club] has come to learn that the insurance company currently providing insurance coverage for the Debtors’ real estate Project will not extend the current insurance coverage beyond its June 1, 2019 termination date,” according to a June 5 motion signed by attorney John Young of Markus Williams Young & Hunsicker LLP, a Denver law firm representing The Aspen Club in the bankruptcy proceedings.
Last week generated jockeying among a number of parties involved in the case over financing and other related matters.
The Aspen Club owes note holder GPIF Aspen Club, which bought the $45 million loan from FirstBank in December 2017, nearly $34 million, according to it bankruptcy records.
In court filings last week, GPIF was able to undercut another insurance offer made by Landmark American Insurance, while also urging the court not to approve the DIP financing from EFO Financial.
GPIF contends it and other creditors aren’t getting the full picture on the relationship between The Aspen Club and EFO Financial, despite their ongoing attempts to do so. GPIF also is trying to learn the reason why FirstBank opted not to fund the second phase of the construction loan it had provided to The Aspen Club.
Given the amount of debtor financing The Aspen Club is seeking, “GPIF should be entitled to discover why the Debtors’ former lender terminated its funding,” wrote Jason G. Cohen of the firm Bracwell LLP, in a June 5 motion, for GPIF Aspen Club.
GPIF also argues that The Aspen Cub is seeking “an additional, large sum of money to spend on the project, and GPIF should be entitled to discover why the Debtors’ former lender terminated its funding,” adding that “it is GPIF’s understanding that (The Aspen Club) directed the various contractors and subcontractors to perform work outside of the scope of the budget approved by FirstBank. It is GPIF’s further understanding that FirstBank learned of this when it received draw requests for unapproved work. FirstBank then declared the loan in default. These facts, if true, are probative of the Debtors’ ability to continue to manage the assets.”
Citing more than $100 million in debt, Aspen Club declared bankruptcy May 16. Construction on its redevelopment project on the east side of Aspen came to a halt in September 2017 when construction firms left the job because they had not been paid.
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