Tamarack lawyer to judge: $2M loan is last chance

AP News
Posted: Oct 12, 2010 8:38 PM
Tamarack lawyer to judge: $2M loan is last chance

In a display of bankruptcy-court brinksmanship, a lawyer for Tamarack Resort told a judge Tuesday that getting a $2 million loan was the last clear chance for the defunct central Idaho vacation getaway to find a buyer and avoid a fire sale.

Resort homeowners added the loan is pivotal to opening skiing on Dec. 20. Without it, there will be no season.

The hearing was the first day of efforts by Tamarack to convince U.S. Bankruptcy Judge Terry Myers to allow lenders led by Swiss bank Credit Suisse Group to extend the loan.

The money, offered for a period of six months at 15 percent interest, would pay for a $250,000 state land lease with Idaho, and for the winterization of unfinished buildings and bankrolling of a chief restructuring officer in efforts to complete a sale.

Jorian Rose, Tamarack's attorney, told the judge the cash was the "last clear chance" to find a buyer for a facility that owes more than $300 million to banks, contractors and others stiffed when the vacation real-estate market soured in 2008.

But the proposal had plenty of foes, largely because investors fronting the cash are demanding they be given first priority in getting repaid.

U.S. Bankruptcy Court trustee David Newman called the loan an "exotic remedy" and "substantial overreach" that hinges on something resort majority owner Jean-Pierre Boespflug has failed at so far: Finding a buyer, at a pennies-on-the-dollar price that's still enough to appease creditors led by Credit Suisse who are owed millions.

"The only way the debtors will be able to pay this note off is if a sale is consummated in this period of time," Newman argued, before urging the judge to reject the plan.

The resort, located 90 miles north of Boise, shuttered lifts in March 2009 after losses mounted and lenders turned off the cash spigot.

Since then, homeowners have desperately sought a solution to restart skiing and save their investments from disaster _ so far, to no avail. Tamarack Municipal Association director Tim Flaherty, leading the effort to restart lifts in two months, was in the courtroom.

Without the judge's blessing for the loan deal, the lifts will likely remain idle, Flaherty said.

After Tuesday's 3 1/2-hour hearing, Myers will take up proceedings _ including Boespflug's grilling _ again Wednesday morning.

In testimony, Boespflug said he has "letters of intent" from three potential buyers, but no actual pact. One company, Pelorus Group of Salt Lake City, has offered $42 million.

Boespflug described the lowest offer as "a factor of 15" of the $2 million loan, which puts it at $30 million.

That's a pittance for a resort that once held frenzied sales of more than $500 million in property to eager buyers hoping to cash in on the vacation real-estate boom that gripped Idaho.

That's in sharp contrast to the $57,000 that Boespflug said Tamarack has in its coffers.

Lenders have lost so much confidence in Boespflug that even if the loan is approved, he must relinquish all management control to appease them.

So what will Boespflug and his partners who own the rest of Tamarack get from a sale? No cash, he said.

"They will be able to turn the page in their life," he told the judge. "This loan appears to be the only way to move on to a transaction and move on with life."