Ruling: Hermitage may keep bank accounts, business records

Posted

Readers: This story was updated at 6:30 p.m. Thursday to add Berkshire Bank declining comment.

NEWFANE — The receiver appointed to protect and preserve foreclosed Hermitage Club properties will not take custody of all of the company's business records, bank accounts or emails. 

Judge John Treadwell is allowing the Hermitage to continue an attempt at "restructuring" by saying the receiver should make "reasonable efforts" to accommodate company officials' need for office equipment, including computers. The company is looking for a loan while the court is prepared for the receiver to maintain the value of the properties for a potential auction.

"Nothing in this order is intended to impede the Hermitage defendants' efforts," Treadwell wrote in an opinion and order filed Thursday. "The court has not granted the receiver access to or control over the defendants' bank accounts, as there is no evidence suggesting that is reasonably necessary to preserve and maintain the subject properties."

Treadwell said any records found on the properties should be secured and preserved by the receiver. But, he added, "there is no need, based on the information before the court, to have the receiver commandeer the Hermitage defendants' email accounts and change the Hermitage defendants' passwords."

Last month, Treadwell granted Berkshire Bank's motion for the appointment of Alan Tantleff of FTI Consulting as receiver. The foreclosure involves $33 million of buildings and property on more than 838 acres in Dover and Wilmington.

The Hermitage's request to exclude vacant lands or undeveloped villages from the scope of the receivership was denied. But Treadwell said the court will not give priority to "fees that are not reasonably necessary to preserve and maintain" lands subject to the foreclosure.

Asked for comment, Berkshire Bank's marketing officer Elizabeth Mach said, "We are not in a position to talk about this specific instance due to privacy and legal concerns." 

Treadwell's order covers leased ski area lands in Wilmington and Dover where the Hermitage ran a private ski resort; a base lodge with all its facilities, roads, infrastructure and water rights; a golf course, clubhouse, amenities and two village parcels in Wilmington; the Doveberry Inn, Hermitage Inn and Snow Goose Inn in Dover; the Horizon Inn in Wilmington; undeveloped parcels known as Old Powderhorn Village, Summit, High Country and Fawn Ridge; and equipment associated with the properties.

Article Continues After These Ads

Chamonix townhouse units also fall under the order. But Treadwell noted that buyers want to complete their purchases to acquire legal titles.

"While units are mortgaged to Berkshire Bank, the purchasers are claiming equitable title to these units and that they are maintaining those units," he wrote.

Tantleff will pay all necessary bills and debts which might otherwise reduce the value of the properties at auction. That means taxes, assessments, lease payments on the ski areas, insurance costs and utilities as well as staff salaries and contracts for cleaning, security, inspection, inventory, accounting and maintenance.

Tantleff will be reporting to the court with a budget showing what services were provided by his group. His charge is to preserve and maintain the value of the properties as "reasonably necessary."

"Because the buildings are to be 'moth-balled,' by definition, the buildings and grounds need not be maintained in pristine condition," wrote Treadwell.

For the first two months, the court will review all costs and expenses from the receiver to see whether they are necessary for the properties' preservation. Then updates are scheduled to be given quarterly — on July 6, Aug. 6 and November 5.

According to the order, the receivership can be dissolved if the bank and the Hermitage decide they want to or if the Hermitage pays all the debt it owes the bank. The figure is more than $17 million.

The receivership "shall also be dissolved upon the termination of these proceedings," Treadwell wrote. "And it shall be dissolved upon a showing by the Hermitage defendants that they have become capable of maintaining and preserving the value of the subject properties for the balance of these proceedings."

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


TALK TO US

If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.



Powered by Creative Circle Media Solutions