Hermitage Club sale might be coming
RUTLAND — Parties involved in the Hermitage Club bankruptcy case are looking at a potential sale.
"The Chapter 7 trustee is exploring a possible Section 363 sale of the debtors' assets," says a transition report of the Chapter 7 Trustee and Berkshire Bank submitted to the United States Bankruptcy Court for the District of Vermont. "That process is ongoing with Berkshire Bank and other secured creditors."
The report was submitted this week by Chapter 7 Trustee Raymond Obuchowski and Berkshire Bank attorneys, Elizabeth Glynn and Paul F. O'Donnell III.
According to lexusnexus.com, 363 sales generally refer to "substantially all of the assets" of the debtor, who "will enter into an asset purchase agreement with a proposed purchaser referred to as a stalking horse bidder. A process will be approved for other potential purchaser to submit bids, and, if other bidders come forward, an auction will be held. After the completion of the auction, the bankruptcy court will conduct a hearing to consider whether the sale to the successful bidder should be approved."
The Hermitage ran a private ski resort at Haystack Mountain and other establishments in the Deerfield Valley until the state shut down properties last year for missing tax payments.
Bankruptcy cases involving Hermitage entities were converted from Chapter 11 to Chapter 7 and Obuchowski was appointed on July 30. Hermitage founder Jim Barnes had been seeking a reorganization rather than a sale.
Obuchowski was expected to take over responsibilities handled by state court-appointed receiver Alan Tantleff of FTI Consulting, who had been tasked with preserving properties foreclosed by the bank since June 2018.
Tantleff "is familiar with the properties and has the processes in place to maintain the properties in their mothball state," according to the report. "The properties are complicated, vast for the area, and spread out throughout Wilmington and Dover, Vermont. The Chapter 7 trustee has visited the debtors' properties in Wilmington and Dover, Vermont, and met with Mr. Tantleff and his team onsite."
The report says Obuchowski, who has no funds from the Hermitage to maintain the properties, has made arrangements for Tantleff to continue in his role. He also will look after Nordic Hills Lodge, which does not fall under the Berkshire Bank mortgage.
All litigation involving the Hermitage has been put on pause while the bankruptcy proceedings take place. The bank is looking to move forward with its foreclosure action in state court. The federal bankruptcy court will hear the bank's motion for a relief from stay on Sept. 20.
The report says if a Section 363 sale does not occur and the relief from stay is granted, "the assets mortgaged to Berkshire Bank will be subject to the state court ... proceeding, and the Chapter 7 Trustee will not need to maintain them."
The budget for the receivership runs through September and is "satisfactory" to Obuchowski, according to the report.
"The Chapter 7 Trustee, Berkshire Bank and the Receive rare in the process of reviewing and approving a supplemental budget that will provide basic funding for the interim period while the Chapter 7 trustee explores a possible section 363 sale of the debtors' assets," according to the report, which notes that Hermitage staff members are employed under a property management firm with a contract with Tantleff. "The onsite staff with their knowledge and experience are vital to keeping the properties maintained in their current condition and for security."
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