This is the best article I have seen that describes the details of recent filing for Chapter 11 from one of the East West Partners Tahoe entities. Hopefully people will read this and the rumor mill can be controlled a little bit. I have emphasized some important points in bold if you don't feel like reading the full article.
Wednesday, February 17, 2010
East West Partners files for Chapter 11 bankruptcy protection
By Greyson Howard
TRUCKEE, Calif. — A spiraling economy and sluggish real estate market led East West Partners to file for Chapter 11 bankruptcy on Tuesday for some of its Lake Tahoe developments.
The filing primarily affects three local properties: Old Greenwood, Gray's Crossing and the Northstar Highlands, along with Tahoe Mountain Club facilities (all under Northstar Mountain Properties), according to a release from Blake Riva, who reps Lake Tahoe properties as a senior partner with East West Partners.
“The current economic conditions are warranting this filing,” Riva said in a Tuesday phone interview. “We've recently gone through changes in financial partners and concluded this would be best.”
The new Ritz Carlton Highlands, Lake Tahoe, and the Hyatt Vacation Club won't be affected by the bankruptcy filing, the release said, nor will Northstar-at-Tahoe, which is owned by Booth Creek Ski Holdings and CNL Lifestyle Properties.
“Our filing includes a short-term financing plan to operate our business as usual during the reorganization, and we'll work diligently to put a long-term plan in place,” Riva said.
That short-term plan comes in the form of $10 million, Riva said.
Looking toward the long-term, Riva said East West Partners doesn't plan to sell off property.
“We're not envisioning liquidation,” he said.
The roundabout intersection on Highway 89 north, already delayed by financial troubles with the Gray's Crossing development, shouldn't be further delayed, Riva said.
“The developer has placed certain funds in escrow for the construction of the roundabout, and we have a bond in place, so one way or the other, the town will have adequate funding to complete the roundabout,” Riva said.
Truckee Town Manager Tony Lashbrook said the roundabout is the only outstanding improvement from East West's development, so impacts from Tuesday's announcement to the town shouldn't be severe.
“It doesn't bode well for our property tax growth, but other developments have gone through this; it's not an unusual process,” Lashbrook said.
East West Partners specializes in real estate development and is developing resort properties in Vail, Beaver Creek and Summit County in Colorado; Lake Tahoe, Calif.; and Deer Valley, Utah, among other resort communities.
Steven Holt, director of public relations for the Ritz Carlton Highlands, said that while the hotel is owned by East West, it isn't affected by the Chapter 11 filing.
“The Ritz is not included in the filing, so it doesn't impact our operations or business — we're business as usual,” Holt said. “We're having an amazing opening season.”
Kirstin Cattell, spokeswoman for Northstar-at-Tahoe, said the ski resort won't be impacted.
“We won't be affected, our operations won't be affected and our guests won't feel a thing,” Cattell said.
According to court documents filed early Tuesday in U.S. Bankruptcy Court for the District of Delaware, the company said it had $256 million in assets as of Dec. 31, 2009, according to a Tuesday story on Reuters. Excluding $189.4 million in contingent guarantee liabilities and bond obligations, it had $61 million in debt.
No Colorado impact
East West Partners founder Harry Frampton said the bankruptcy filing won't affect operations in the rest of the company. In Colorado, East West is involved in the Westin Riverfront Resort & Spa project in Avon, still has interests in Eagle Ranch, and is doing projects in Breckenridge and Denver. In addition to Lake Tahoe, the company is also involved in a project in Deer Valley, Utah.
“We have 15 to 20 projects going right now, and this was 100 percent isolated from the other projects,” Frampton said. “We've always tried to finance projects separately, so if we have a problem with one, it doesn't affect the others.”
Riva said East West Partners doesn't plan to sell off the property, and Frampton said the company intends to complete the projects.
Frampton said the Lake Tahoe development was hit by a double whammy. First, the Nevada real estate market is one of the hardest-hit in the country. Second, East West lost its lender on the project.
Frampton said East West for years did real estate investment financing with Crescent, a real estate investment trust. That company was bought a couple of years ago by Morgan Stanley, which walked away from its Crescent investments several months ago.
Frampton said taking the Lake Tahoe project into bankruptcy was essential in order for the company to “clean up” financing and other problems. And, he said, the project will receive a $40 million cash infusion from Barclay's Capital, which originally financed Morgan Stanley's purchase of Crescent.
“That's a real endorsement of the project,” Frampton said. “There are very few projects or companies that get $40 million in this environment.
“We're actually going to have a toast to that tonight,” Frampton said Tuesday.
— Scott N. Miller of the Vail Daily contributed to this report.