Two Schweitzer Mountain Resort owners are counting on cash from a prominent Honolulu developer to lead the ski hill out of bankruptcy. Jean Brown and Bobbie Huguenin want to thwart the sale of their family owned and deeply indebted resort. The mother-daughter team filed bankruptcy last November. This week they submitted a 100-plus page reorganization plan to a judge.
The proposal aims to pay creditors some of the $28 million they are owed. The family claims it can do so with $30 million pledged by Bruce Stark, a developer in Hawaii.
However, in a letter from Stark filed in court documents, he only agrees to participate if the court approves the plan before Oct. 31. He also wants to review the resort’s finances and operations as well as those of the resort’s parent company, Pack River Limited, before he antes up.
Stark said the cash to pay U.S. Bank a flat $15 million to settle its debt would not come from his company. The family and resort owe the bank about $23 million.
Schweitzer is being run by court-appointed attorney Ford Elsaesser. He’s overseen resort operations for two years, and his appointment initially was applauded by Brown and Huguenin. The two are now suing Elsaesser and U.S.
Bank, but have failed so far to win back control of the mountain.
Elsaesser had not seen all of the bankruptcy reorganization plan yet. An important part, he said, was the disclosure statement that verifies whether Stark has the cash to back up the proposal.
“I really can’t comment until I’ve reviewed it all,” he said.
For the use of his money and collateral, Stark would receive an undisclosed interest in the mountain and Pack River.
Stark has developed some large condominium complexes and office towers in Hawaii. But he’s also had his share of troubles, including putting several of his companies into bankruptcy.
A 1996 newspaper profile about Stark in the Honolulu Advertiser said he was a man caught in a “financial and litigation vice. … He has lawsuits pending against him from Hawaii to New York, and he is struggling to save what remains of his business empire.”
Neither U.S. Bank nor Huguenin and her lawyer could be reached for comment Wednesday.
The resort’s reorganization proposal is a buffet of payment plans. Creditors are offered three types of payment, but they do not get to choose which one. The resort would choose for them.
The options include: pay creditors in full within one year; pay claims over a five-year period at 10 percent interest; or give creditors property on the mountain that was used to secure the claim.
U.S. Bank is also given three take-it or leave-it options. The family members claim in the first option that the resort does not owe the bank any money. Brown and Huguenin are suing the bank, saying officials conspired to run the resort into debt and take over the family land as collateral.
If the family loses its legal battle, it agrees to pay the bank whatever the court determines over a 15-year period.
The second option is to pay the bank $17 million in 15 years. The last proposal calls for an immediate $15 million payment and for the bank to forgive any remaining debt.
Harbor Properties Inc., a Seattle company that owns a ski hill at Stevens Pass in Washington, has offered $18 million to buy Schweitzer. The proposal also let the family retain a 10 percent ownership in the ski hill.
The sale was approved by all parties, including the bank. But Brown and Huguenin later pulled out of the sale. They claimed the resort was worth closer to $66 million and did not want to be liable for any debts after the sale.
Harbor officials are not impressed with the reorganization plan the two family members submitted. It leaves Huguenin’s three sisters with a smaller interest in the resort. The bank is also being asked to forgive about $8 million of its loan to the resort, said Ron Cook, chief financial officer for Harbor Properties.
“I would suspect this new plan is not acceptable to the bank,” he said, adding it leaves no money left to actually run the ski hill. “To portray in any way that this plan solves the (resort’s) problem I think is inaccurate.”
Harbor officials will go back to the bank, creditors and the rest of the Brown family with its original sale agreement. Cook is sure all parties will still agree to the terms and the plan will be submitted to the bankruptcy court.
“We want an alternative for the court to look at besides Jean and Bobbie’s plan,” he said. “We are committed to closing this deal in terms that are superior to what they are proposing.”