A messy dispute over the sale of Schweitzer Mountain Resort could strip Sandpoint’s Brown family of any ownership in the ski hill it founded 34 years ago.
The debt-ridden resort was supposed to be sold this month to a Seattle firm for $18 million. The deal - initially agreed to by the entire Brown family - would pay off some of the $28 million they owe creditors and U.S. Bank. The family would also retain a 10 percent ownership in the mountain.
The sale went before a federal judge Tuesday, but no decision was issued. The sale was opposed by two of the five family owners, Bobbie Huguenin and her mother Jean Brown.
They claim the resort is worth $66 million and that U.S. Bank has conspired to sell it cheap, leaving the family penniless.
If the judge rejects the sale because of the sibling squabble, a new deal could be drafted that cuts the family out of the resort entirely.
“We won’t close this sale without their (the family’s) consent. If we do, the deal changes,” resort attorney Joseph Meier told Judge Edward Lodge. “We can come back to the court with another deal that (excludes) the 10 percent partnership.”
A new arrangement also would eliminate $1 million the Seattle firm, Harbor Properties Inc., agreed to loan the Browns.
The family owes $21 million to U.S. Bank. Because of the huge debt, Sandpoint attorney Ford Elsaesser was appointed last year to oversee and sell the ski hill to pay off creditors.
Several creditors at the hearing, including U.S. Bank and Bonner County, which is owed back taxes from Schweitzer, urged the judge to approve the current sale agreement.
“The bank is trying to preserve the value of these assets and get skiers on the mountain,” said attorney Peter Holmes.
The bank has been more than fair and patient, loaning Schweitzer $750,000 last week to open the resort this winter, Holmes said.
He charged the family with mismanaging the resort and defaulting on loans. The bank insisted a management consultant be hired in 1995 to help run the mountain. Resort owners fired the consultant after three months.
After Elsaesser was appointed trustee, the resort had one of its best seasons in the last ten years, Holmes added.
The value of the Schweitzer resort is a main controversy. Attorney Edwin McCabe, who represents Huguenin and Jean Brown, insists the value is $66 million. He based that figure on a sworn statement from Huguenin.
“Perhaps that value is even a conservative one,” he said. “At the very least, the (current) value is suspect.”
“If the bank agreed the resort is worth $66 million, we would not be here, we would not have any of the problems we have here today,” countered Holmes.
Gery Edson, an attorney for Bonner County, said McCabe was tossing out red herrings to stop the sale. The resort has filed a tax appeal, he said, claiming its resort property is worth only $8.6 million.
“This is disingenuous to claim it’s now worth $66 million,” Edson said.
McCabe had several complaints about the sale. Elsaesser was illegally appointed and the case should be in state court, not federal court, he said. McCabe also accused the judge of a conflict of interest because of past cases involving U.S. Bank. He wants the judge to step down and the sale scuttled.
Judge Lodge will issue a written decision in the case, possibly within the next two weeks.
“While waiting for a decision we are going full speed ahead on opening the resort,” Elsaesser said. “Nothing occurring at this hearing will threaten the winter ski season.” , DataTimes