Hermitage business issues blamed in bankruptcy filing

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HARTFORD, CONN. — About half of the debt cited in the Hermitage Club founder's wife filing for Chapter 11 bankruptcy is connected to judgments in Hermitage-related lawsuits.

Donna J. Barnes filed the documents last month in federal court in Connecticut. She lives in Avon, Conn.

Her husband, Jim Barnes, and companies that operated club activities, such as skiing at a private resort at Haystack Mountain and golfing, have been involved in an ongoing stream of litigation in Connecticut and Vermont. Berkshire Bank foreclosed several Hermitage properties in February 2018 after payments on three notes totaling more than $17 million were not made, then the Vermont Department of Taxes disallowed transactions at Hermitage establishments for missing tax payments.

In the filing, Barnes blamed the bankruptcy primarily on business issues rather than consumer debts, listing 38 creditors who are owed about $16 million. Creditors include former Hermitage chief financial officer Dan Solaz, Reinhart Food Service LLC, RTM Capital Partners and Hermitage Club member Mark Brett, all of whom have liens on an $11 million home owned by the Barnes family in Westerly, R.I., related to Hermitage debt that totals about $8.5 million.

At the time of the filing, Barnes said she has not filed for bankruptcy within the last 8 years and there were no bankruptcy cases pending or being filed by her spouse. Her assets, half of the family's properties, are worth about $6.8 million, according to the filing. She also is holding a $135,000 cabana at a Rhode Island yacht club for a family member.

The possibility of Barnes or her husband filing for bankruptcy had been mentioned last month by club member Douglas Hollenbeck during testimony in a case alleging fraud and breach of contract in Windham Superior Court, Civil Division. An email from Jim Barnes indicated a bankruptcy filing was "imminent," Hollenbeck told the court, unsure which spouse would file.

Chapter 11 bankruptcy "involves a reorganization of a debtor's business affairs, debts and assets," according to investopedia.com. "This version of bankruptcy gives the debtor a fresh start. However, the terms are subject to the debtor's fulfillment of his obligations under the plan of reorganization. Chapter 11 bankruptcy is the most complex of all bankruptcy cases. It is also usually the most expensive form of a bankruptcy proceeding. For these reasons, a company must consider Chapter 11 reorganization only after careful analysis and exploration of all other possible alternatives."

Reach staff writer Chris Mays at cmays@reformer.com, at @CMaysBR on Twitter and 802-254-2311, ext. 273.

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