BURLINGTON — A judge is allowing a New Jersey-based bank to take away snowmaking equipment purchased with money it loaned to the Hermitage Club.
The approximately 46 snow guns and two tower-mounted TechnoAlpin fans are at Haystack Mountain in Wilmington, where the the Hermitage ran a private ski resort until financial issues strained the group and caused the Vermont Department of Taxes to shut down establishments for missing tax payments last year.
"Lakeland Bank is directed to remove its collateral within a reasonable time, as it determines after consultation with potential purchasers, the Chapter 7 Trustee, and the receiver acting on behalf of Berkshire Bank," United States Bankruptcy Judge Colleen A. Brown wrote in an order issued Friday in U.S. Bankruptcy Court for the District of Vermont. "It is further ordered that the Chapter 7 Trustee shall cooperate with Lakeland Bank to facilitate a swift, efficient and safe removal of the snowmaking equipment in which Lakeland Bank has a security interest, in the manner most likely to benefit the estate."
Berkshire Bank, other creditors and the trustee are working on a sale of Hermitage assets. Berkshire Bank's foreclosure process had been interrupted by bankruptcy filings in May. A state court-appointed receiver has been preserving properties under the associated mortgage since last year.
Brown granted Lakeland Bank relief from the automatic stay, which put litigation against Hermitage entities on hold. Bankruptcy filings trigger a stay, making it necessary to get special approval to move forward with cases while bankruptcy proceedings are taking place.
In a court filing arguing for relief from the stay, the bank's attorney Heather Z. Cooper of Facey Goss & McPhee in Rutland cited U.S. Bankruptcy Code that allows for an interested party to seek such relief "for cause, including the lack of adequate protection of an interest in property of such party in interest."
"Lakeland Bank has not been paid pursuant the terms of the contract," Cooper wrote. "The collateral is declining in value as it ages. Interest and late fees continue to accrue on the unpaid obligation."
Lakeland Bank said it loaned the Hermitage $900,000 to buy snowmaking equipment in February 2016. The Hermitage has not made payments since December 2017 and about $720,730 was still owed as of July 1, according to an affidavit. The bank said last July, the equipment had been appraised at $365,000.
Reach staff writer Chris Mays at firstname.lastname@example.org, at @CMaysBR on Twitter and 802-254-2311, ext. 273.