Hermitage assets will be sold
RUTLAND — Hermitage Club assets will be sold after a merged set of bankruptcy cases went from Chapter 11 to Chapter 7.
A judge granted a motion Friday to convert the bankruptcy case to "a Chapter 7 liquidation and ordered the appointment of a trustee to oversee the sale process," said Tim Treanor, member of the Ad-Hoc Committee of Members, which is made up of club members who wanted to have a voice in the proceedings. He expects the judge to enter an order Monday or early this week.
"My understanding is that, at that point, the U.S. Trustee becomes responsible for selling the assets," Treanor wrote in an email. "The trustee panel in Vermont only consists of two qualified trustees and one is conflicted because his law firm represents a party in the bankruptcy. The other qualified trustee is Ray Obuchowski, a veteran bankruptcy lawyer who has a great reputation. He will then manage a sale process if the creditors pay for the costs of the sale process (marketing fees, investment banker)."
Treanor said if no funds are provided for a sale process, the foreclosure action brought upon by Berkshire Bank will be allowed to continue and the bank will take possession of certain assets. Remaining assets will be sold "on the courthouse steps so to speak (meaning no expenditures on marketing the sale, etc., just minimum notice through media notices)," he wrote.
While unsure of what will ultimately happen, Treanor said this is the point where "prospective buyers come out of the wordwork looking for a deal."
"The members obviously are considering options," he said.
Treanor's group paid attorney fees for three creditors who filed the involuntary Chapter 7 bankruptcy petition in May, just before two Hermitage entities filed for Chapter 11 bankruptcy.
He previously said committee members want a quick sale so the ski resort that had been run by the Hermitage at Haystack Mountain could be reopened in time for winter.
Hermitage founder Jim Barnes had been hopeful that Chapter 11 filings would lead to a reorganization process and avoid liquidation.
Two motions seeking financing for restructuring efforts were made but creditors took issue with the budgets, worrying that the plan did not offer enough protection for them and questioning where certain funds would go.
The proposal was deemed "a last ditch effort to hold off the inevitable" by Elizabeth Glynn, attorney for Berkshire Bank, which foreclosed several Hermitage properties earlier last year and sought a sale process before the bankruptcy petitions were filed.
William K. Harrington, who serves as United States trustee for several states including Vermont, filed a motion to convert the cases to Chapter 7. Charged with enforcing civil bankruptcy laws, he raised concerns earlier this month about the Hermitage engaging in prohibited acts by posting a reorganization plan on the companies' website without court approval.
Harrington's motion received support from the town of Wilmington, Berkshire Bank, Treanor's committee and the Barnstormer Summit Lift LLC, which is made up of members who invested in a chairlift at Haystack. Cold Brook Fire District, a local municipality that runs a water and sewer system, also advocated for a Chapter 7 sale.
Reach staff writer Chris Mays at email@example.com, at @CMaysBR on Twitter and 802-254-2311, ext. 273.
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