WILMINGTON — Hermitage Club founder Jim Barnes is describing his new plan to reorganize and reopen as "fair and equitable to all."
"The cornerstone of the plan is that the company exits bankruptcy through a merger with a public shell company whereby all shareholders have liquidity through publicly traded shares," he said Friday in an interview outlining a draft plan.
Barnes said creditor claims will be paid in "a combination of restructured payments with interest in a five-year term, issuance of public company shares and cash. The shares will be restricted stock units to be approved for sale by the board after a one-year period."
Barnes said the merger would cut down on time and expenses involved with the process of becoming a publicly traded company. Hermitage Inn Real Estate Holding Company LLC and Hermitage Club LLCs — two entities that ran the Hermitage's private ski resort at Haystack Mountain, a nearby golf course and other establishments — filed bankruptcy petitions Tuesday.
According to his plan, the court has to approve debtor-in-possession financing then members must begin paying their annual dues right away. A proposal submitted to the United States Bankruptcy Court for the District of Connecticut would see Restructured Opportunity Investors Inc. of Waterbury, Conn., lending up to $1.75 million for reorganization.
That money would "provide the club with the ability to meet its payroll, insurance, property tax, maintenance, legal and professional expenses during the Chapter 11 proceedings while it moves to finalize a plan with its members and creditors," Barnes said. "Neither the DIP lender nor the existing lender [Berkshire Bank, which foreclosed the ski resort, golf course, several inns and townhouses early last year] are permitting any use of funds to reopen the club facilities until acceptance of a plan. The reorganization plan is reliant on swift acceptance from a majority of its creditors at which point the club will request an expedited review and vote on the final plan of reorganization which will allow for dues collection and reopening of the club with court approval."
The goal is to begin to reopen in 60 to 90 days. Barnes said agreements with Club President Harper Sibley and real estate company The Matos Group of East Hartford, Conn., would need to be confirmed by a new board of directors.
The plan calls for changing the governance model: There would be eight directors. They will represent those with "legacy" memberships, those who contributed to the "$100,000 Equity Club," those who invested in the Barnstormer Summit Lift, those who invested in convertible debt, and Barnes or his family. Two outside directors and a vendor creditor would be voted in by the majority of the board.
Barnes said the plan also proposes the creation of a Hermitage Club Foundation, which would "further meet the philanthropic needs of the Deerfield Valley community," using "free cash flow after the planned retirement of the senior debt in year five."
Reach staff writer Chris Mays at firstname.lastname@example.org, at @CMaysBR on Twitter and 802-254-2311, ext. 273.