Ski Resort Placed In Bankruptcy Browns’ Maneuver Shouldn’t Stall Season, Caretaker Says
Just weeks before Schweitzer Mountain Resort is slated to open, its owners have thrown a wrench into winter operations and a pending sale of the debt-ridden ski hill.
To regain control of the resort, Sandpoint’s Brown family has placed Schweitzer into bankruptcy protection.
“These (bankruptcy) filings create some degree of uncertainty, but I am relatively certain we will still open,” said Sandpoint attorney Ford Elsaesser. He was court-appointed to run the mountain and broker a sale to pay off the resort’s $28 million debt.
The bankruptcy filing freezes the resort’s assets. That means some $70,000 to $100,000 worth of checks issued to creditors will bounce, and payments to employees could be delayed.
“Whatever checks were written and not yet paid by the bank are frozen. I had to tell bank officers today to bounce the checks,” U.S. Bank attorney Pete Holmes said.
U.S. Bank is the resort’s major creditor. It loaned Schweitzer about $21 million to develop the mountain and has not been repaid. The bank gave the resort another $750,000 so it could afford to open this winter. Only $250,000 of that money has been advanced. A judge will have to approve turning over the remaining $500,000 because of the new legal tangle, Holmes said. Still, he expects Schweitzer to have a ski season.
“Really the biggest problem we have right now is if there is going to be enough snow (by Thanksgiving),” he said.
The bankruptcy was filed in Spokane by Bobbie Huguenin. She is part of the Jim Brown family, whose members have owned and operated the ski hill since 1963. The family avoided bankruptcy last year by putting the resort into receivership, and giving Elsaesser control.
The bankruptcy could give that control and all the resort’s assets back to Huguenin. She declined to comment Tuesday, referring all questions to her attorney Robert Somma in Boston. Somma did not return phone calls.
Elsaesser filed an emergency motion Tuesday, asking a judge to retain him as trustee and not turn over the mountain to Huguenin.
“Ford (Elsaesser) is still the resort custodian but as far as his authority and who can call the shots today, that is a little bit in the air,” Holmes said.
At least one company developing property on Schweitzer Mountain wants Elsaesser to remain in charge.
“If the receiver is replaced by Barbara Huguenin, my firm and the other developers on the mountain … will be severely damaged,” said Peter Forsch, of McCormack Properties of Idaho Inc. “The marketability of the mountain will be compromised, if not destroyed.”
If the sale to Harbor Properties fails, Forsch said, other offers - if any - would be for less money.
McCormack Properties is developing condominiums at Schweitzer. Forsch is the former general manager of Silver Mountain Ski Resort.
Brown family members are contesting a sale that they had sought themselves earlier this year.
Elsaesser, Huguenin and other Brown family members signed a deal to sell the resort for $18 million to Harbor Properties, a Seattle firm that also owns the Steven’s Pass ski area.
Huguenin and her mother, Jean Brown, reneged on the sale and contested it in court. The two family members said the resort is worth $66 million even though for tax purposes they listed the ski hill’s value at $8.6 million.
A judge allowed the sale to continue and ordered three appraisals of the property, which aren’t finished.
“Really what all this continues to turn on is what is the mountain worth?” Holmes said. “No one more than U.S. Bank wants to make sure it’s getting a fair price. I have a feeling that unless Miss Huguenin and Miss Brown know of a better price out there that the bankruptcy case is not very interesting. It’s more delay.”
The resort owes money to about 200 creditors besides U.S. Bank. Schweitzer has lost money for years but had its best season while under Elsaesser’s charge, Holmes said.
“We can’t have the same people managing who have proven to be inadequate managers in the past,” he said of Huguenin wanting to regain control of the resort. “The bankruptcy just means more expenses and more money going to lawyers instead of to bank debt and owners.”
Harbor Properties remains interested in buying Schweitzer, despite the legal morass. The company did, however, request its $500,000 down payment back before the bankruptcy was filed.
“Harbor is hanging in for now,” Elsaesser said. “The word I get from them is ‘let’s persevere and get the deal done.”’
Creditors could unite and ask a bankruptcy judge to go ahead with the sale to Harbor. It doesn’t matter if Schweitzer is in bankruptcy or receivership, Holmes said.
“Changing forums is not going to change the answer to what do you do with the mountain?”