BURLINGTON — The state court-appointed receiver assigned to preserve Hermitage Club properties foreclosed by Berkshire Bank last year will be replaced by a United States trustee as the bankruptcy cases go from Chapter 11 to Chapter 7.
Following a hearing Friday, Judge Colleen A Brown said the U.S. Bankruptcy Court for the District of Vermont found cause to convert the cases "due to the continuing loss and diminution of the debtors' estates and the absence of a reasonable likelihood of rehabilitation; the debtors' gross mismanagement of the estates; and the debtors' failure to maintain insurance."
Her order is expected to trigger the start of a process for selling off Hermitage assets. Hermitage founder Jim Barnes had sought reorganization under Chapter 11 rather than liquidation under Chapter 7.
Brown granted a U.S. trustee's motion to convert or dismiss the Chapter 11 cases. It had the support of Berkshire Bank, which foreclosed Hermitage properties including the private ski resort at Haystack Mountain and nearby golf course last year; the Ad Hoc Committee of Club Members, which was given permission by the court to participate in the bankruptcy proceedings; Barnstormer Summit Lift LLC, which includes club members who invested in a chairlift at Haystack; and the town of Wilmington.
"The court finds that it is in the best interest of creditors that these cases be converted," Brown wrote in an order issued Tuesday. "Upon appointment of a Chapter 7 Trustee by the Office of the United States Trustee, the receiver, Alan Tantleff, will be relieved of his duties in these cases and the Chapter 7 Trustee will take over such duties."
Under the Department of Justice, the U.S. Trustee Program is responsible for overseeing the administration of bankruptcy cases.
Brown said Tantleff "may have a short period of time, as approved and authorized by Berkshire Bank, to wrap up his responsibilities and provide such information and transition assistance to the Chapter 7 Trustee as the Trustee reasonably requests — or the court approves, if the trustee, the receiver, and Berkshire Bank cannot agree as to when the receiver shall be relieved of the duties assigned to him ..."
In May, the court allowed Tantleff to stay on the job during the bankruptcy proceedings. All other litigation had been put on pause after bankruptcy petitions had been filed so his role was put into question.
Tantleff had been appointed receiver by Judge John Treadwell in Windham Superior Court, Civil Division in 2018. Tantleff has filed reports about the status of properties and interactions with Hermitage staff.
Reach staff writer Chris Mays at email@example.com, at @CMaysBR on Twitter and 802-254-2311, ext. 273.