BURLINGTON — By seeking more time to review contracts, the Chapter 7 trustee assigned to oversee the Hermitage Club bankruptcy case is trying to keep crucial agreements in place — including the approximately 252 acres of Haystack Mountain leased from the town of Wilmington for the private ski resort.
"This lease is or may be integral to the ski area, and potentially the marketing and eventual sale of the premises," Chapter 7 Trustee Raymond J. Obuchowski wrote in a motion to enlarge the time for assumption or rejection of unexpired leases and set an emergency hearing in United States Bankruptcy Court. "The possible rejection of the lease by the Estate may result in irreparable damage to the Estate and the ability to realize any value through the sale of the ski area in an entirety, however, this lease and potentially others by the failure to be properly scheduled have taxed the Trustee's ability to assess and review such contracts within the time periods provided by the Bankruptcy Code."
Contracts, leases, insurance, taxes and rent associated with the town of Wilmington have a value of between $85,000 to $86,000 per year and have been paid by Berkshire Bank. The bank filed a foreclosure complaint against the Hermitage last year after the company failed to make payments on loans totaling more than $17 million.
Obuchowski was appointed Chapter 7 trustee in July after Hermitage bankruptcy cases went from Chapter 11 to Chapter 7, dashing the hopes of company founder Jim Barnes to reorganize rather than have assets sold. Obuchowski wants to extend a period for filing claims from Nov. 1 to Nov. 27.
Although Barnes "did appear for examination at the initial meeting of creditors on Sept. 6, 2019, the depth of the financial affairs of the combined debtors [Hermitage Inn Real Estate Holding Company LLC and Hermitage Club LLC], and affiliates has prevented the trustee from having sufficient time to complete a review of all possible unexpired leases and executory contracts," wrote Obuchowski.
Nine other unexpired leases and contracts still in force were listed in the motion. They pertained to specifications for a home, marketing, a family membership to the club, audio-visual equipment, software and more.
Obuchowski "has been reviewing the claims as filed and has found other leases as part of the claim, albeit potentially as security interests described as leases," according to the motion. "Some claims were not listed or scheduled as leases at all."
If a Chapter 7 trustee does not assume or reject a contract or unexpired lease within 60 days after an order for relief or the court does not provide additional time, the contract or lease is considered to be rejected, according to the motion.
Obuchowski could not immediately be reached Wednesday. Attorneys for several parties in the case — including the Hermitage entities, Berkshire Bank, a group of club members who invested in a chairlift, an ad-hoc committee of club members who have been granted permission to participate in bankruptcy court hearings, and Reinhart Foodservice LLC — have consented to allowing for more time.
"I think, by and large, it's just a due diligence step," Town Manager Scott Tucker said in an interview Wednesday afternoon. "This is the U.S. trustee, so he's looking over all the parts. There's quite a bit of moving parts for them."
Tucker said the town would not oppose the court granting additional time.
"This is relatively complex so we won't object," he said. "I think it's just they needed time to go through all the materials."
At the time of the interview, Tucker had no news on a potential sale.
"The bank is conversing, their attorney and our attorney," he said. "I'm not aware of anything at this point. There's always a few groups that are interested in the property but I've not actually seen anything developed yet."
Reach staff writer Chris Mays at firstname.lastname@example.org, at @CMaysBR on Twitter and 802-254-2311, ext. 273.