Citing pandemic, Hermitage founder seeks to delay auction
Editor's note: This story was updated at 5:30 p.m. Tuesday.
BURLINGTON — Hermitage Club founder Jim Barnes is calling for a delay of 60 to 90 days for a bankruptcy auction involving a former private ski resort at Haystack Mountain in Wilmington, several inns and a golf course.
Declarations of states of emergency on the national and state levels in response to the pandemic resulting from the worldwide outbreak of COVID-19 are cited in an affidavit submitted Monday to the United States Bankruptcy Court for the District of Vermont.
"In Vermont, other U.S. states, and countries around the world, COVID-19 is causing complete shutdowns of governments, schools, businesses, and financial markets," Barnes said, adding that the pandemic "directly adversely impacted both local and larger publicly traded national ski resorts and their operators."
In an order, Judge Colleen A. Brown granted a motion for an emergency hearing to modify the deadline for qualified bids and the date of the auction. She said the hearing will held at 3 p.m. Wednesday by telephone and written responses are preferred.
As of Monday night Alan Tantleff, the court-appointed receiver tasked with preserving Hermitage properties until they are sold, expected the auction would still occur Friday but it is to happen by telephone rather than in person. He said he knows a lot of people in the community are counting on the sale and returning to "normalcy."
"The entire team is working to carry this over the finish line," he said in an email response to the Reformer.
According to the affidavit, Barnes is the first and founding club member in December 2007, chairman of the management committee of Hermitage Inn Real Estate Holding Company LLC and former manager of Hermitage Club LLC, the wholly owned subsidiary of HIREHCO. He was the Hermitage's chief executive officer for more than 10 years. He also described himself as an unsecured creditor in the bankruptcy case, holding claims of $1.5 million in club memberships, more than $1.9 million in unpaid wages, more than $45.4 million in loans and $9.2 million in amounts invested by a family trust.
Barnes said he is aware of several investment groups interested in the Hermitage assets.
"These groups include a multi-billion dollar U.S. investment firm that owns, operates and develops prime real estate around the world, with an emphasis on luxury hotels, resorts and branded residential properties; and which is also an active owner of and investor in hospitality operating platforms," he said. "These investment groups are not immune from the historic plunges that have hit investment and finance markets around the world from the COVID-19 pandemic. As a result ... the groups with which I am familiar have decided either to not make any acquisitions for the next 60 to 90 days or have had financing commitments frozen so as to preclude them from participating in an auction of the debtors’ assets until the COVID-19 pandemic dissipates."
Also submitted to the court by Barnes is an email to the U.S. bankruptcy trustee assigned to the case from Slopeside Ventures LLC Managing Member Steve Malone of Killington, whose group has assisted an investment firm interested in bidding since December. Malone said the pandemic disrupted financial markets around the world and closed more than 500 ski resorts before a peak holiday weekend.
"We have been informed from lending sources that they are holding off on any funding commitments for at least the next 60 days (possibly 90 days) until this pandemic stabilizes," he added. "As the investment group was planning to submit a bid they are no longer in a position based on this worldwide crisis and the frozen debt markets. The investment group remains interested in the project should you or the court decide to suspend the process and reschedule."
A 60- to 90-day delay of the auction would not "impede with plans to reopen the mountain in time for the winter ski season," Barnes said. "In my opinion, a closing during the month of June would still provide sufficient time for a new owner to prepare Haystack operations for a full reopening by Oct. 1. Further, the incremental carrying costs to maintain the assets in good working order for the extra 60-90 days would likely be substantially exceeded by the higher price obtained if additional bidders are allowed time to participate in the auction."
Reach staff writer Chris Mays at firstname.lastname@example.org, at @CMaysBR on Twitter and 802-254-2311, ext. 273.
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