NEWFANE — The Hermitage Club has "no right under the mortgages to restructure after a material default," a lawyer for the private club's foreclosing bank says.
"The debt has been accelerated and defendants have no right to interfere with plaintiff's foreclosure rights," Elizabeth Glynn, attorney for Berkshire Bank, wrote in a reply to the Hermitage's objection to the bank's proposed order for appointment of receiver filed Monday in Windham Superior Court Civil Division. "The court has appointed a receiver and defendants may not interfere with the receiver's exercise of routine powers such as securing the business records
and email accounts for delivery to the purchaser at the judicial sale."
Receivership provisions, Glynn said, require Hermitage personnel to vacate all the properties that fall under the mortgage. They include the ski area and base lodge at Haystack Mountain, a golf course, four inns, townhouses and undeveloped land.
Glynn addressed the Hermitage's claim that a bridge loan is essential to funding the restructuring of the company during the foreclosure, and its objection to turning over its bank accounts for that reason.
"The un-rebutted evidence at the May 10 hearing proves defendants are incompetent to manage the Hermitage resort properties," she wrote. "Defendants ran the resort into insolvency and their numerous claims of take-out financing never materialized. Case in point, the white knight proposed at the May 10 hearing proved to be a person who could not afford his modest condominium fees at a Stratton area condominium, was foreclosed, and then filed bankruptcy. Highly unlikely restructuring potential there."
Glynn also requested the court deny all the Hermitage's other objections. She said the company's attorneys could contest the hourly expenses if they were worried about duplication of costs associated with coordination between the receiver and the auction company.
The Hermitage did not want the receiver to watch over Summit, High Country and Fawn Ridge because they are undeveloped villages, nor Chamonix townhouses because there is a homeowner association. Glynn called the objection "inconsistent with the logic of the receivership order, which is to subject all mortgage collateral to the receivership during the foreclosure so that it may be maintained and preserved as needed for the judicial sale.
"The better practice would be for defendants to object to the necessity or reasonableness of a particular hourly expense at the hearing on the allowance of the receiver's account," she wrote, adding that security to patrol the villages would be reasonable even if trespassers were never discovered.
With the belief that a ski lift runs across the undeveloped properties, Glynn said the receiver will want to inspect and maintain the equipment.
Regarding the Hermitage's call to hire a receiver with rates closer to what local property management groups would charge, Glynn said fees for Alan Tantleff of FTI Consulting were competitive with the national rate for handling high end resorts.
Reach staff writer Chris Mays at cmays@reformer.com, at @CMaysBR on Twitter and 802-254-2311, ext. 273.
