Judge Keeps Schweitzer Deal Alive Bid By Pair In Brown Family To Block Resort Sale Denied

The sale of Schweitzer Mountain Resort could be back on track after a U.S. District Court judge denied Thursday an attempt to block the transaction.

“This is a complete victory,” said Sandpoint attorney Ford Elsaesser, who was appointed receiver last year as part of a plan to avoid bankruptcy proceedings for the debt-plagued property.

“Basically, the judge has denied all of their meritless motions,” Elsaesser said.

Those motions were filed in August by two members of the Brown family, owners of Schweitzer since it opened in 1963.

Bobbie Huguenin and her mother, Jean O. Brown, contended an $18 million offer the family accepted from Harbor Properties of Seattle only weeks earlier is far below fair market value for the resort. Schweitzer, they said, could fetch closer to $66 million from the right buyer. They also argued the federal judge appointed to approve the sale could not be impartial, since his nephew worked as an officer for U.S. Bank. The bank is owed millions by Schweitzer.

On Thursday, U.S. District Judge Edward Lodge denied a motion that he disqualify himself from the case and approved the sale, pending valuation by court-appointed appraisers.

Huguenin has made no decision on whether to appeal.

“I don’t know anything at this point,” she said after hearing about the judge’s order. “I’m planning to read the rulings and go from there.”

Said Elsaesser: “My hope is that they won’t appeal - for the community’s and the employees’ sakes - and that this decision will keep Harbor at the table so we can get that transaction done. They wanted to close this deal several weeks ago.”

Ron Cook, chief financial officer and vice president of finance for Harbor Properties, said his company remains interested in the resort. Harbor also runs the Stevens Pass ski area near Snoqualmie Pass, Wash.

“For us, it’s always been a business decision, in spite of the irritations of the past couple of months,” Cook said. “We still see this as an opportunity.”

If the ruling is appealed, however, the delayed sale could scare off Harbor Properties.

“I fully expect an appeal,” Cook said. “Our position won’t change if it stays in the 30- to 45-day category. But if it gets strung out for a long period of time, I can’t predict what we’ll do.”

A key element in the judge’s ruling to let the sale go forward was a former property tax appeal where the owners argued Schweitzer was worth only $8.9 million.

“I don’t know what the appraisers will say, but most people in the ski industry concur that the Harbor Properties offer is very favorable,” Elsaesser said, adding that $66 million is too much, $8.9 million is too cheap and “$18 million is about right.”

The Harbor Properties deal came together after the family shopped Schweitzer around for more than seven months, looking for a buyer to help offset a $28 million debt. That debt began piling up in 1990 when the ski hill borrowed money from U.S. Bank of Washington to build a new hotel, day lodge and high-speed chairlift as part of a 10-year expansion plan.

Of the 200 creditors waiting to be paid by Schweitzer, U.S. Bank of Washington is owed the largest amount at $21 million.

Under that debt load, the owners risk losing more than a ski resort that hasn’t left family hands in almost 35 years of operation. Personal property is also at stake, according to Huguenin.

“This has been an interesting and painful learning curve,” she said. “If it wasn’t our own lives passing before me, it might even be fascinating.”

Regardless of the legal wrangling, Schweitzer will open on schedule this season, thanks to a $750,000 loan from U.S. Bank in August. As many as 500 jobs would have been affected had the bank not stepped in with financing.

, DataTimes