Idaho judge keeps Tamarack in suspense over loan

AP News
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Posted: Oct 13, 2010 7:12 PM
Idaho judge keeps Tamarack in suspense over loan

A federal bankruptcy judge kept Tamarack Resort owners and creditors in suspense Wednesday when he didn't immediately decide on a disputed $2 million loan meant to prop up the defunct central Idaho vacation getaway while the search for a buyer continues.

U.S. Bankruptcy Judge Terry Myers took eight hours of testimony over two days in his Boise courtroom under advisement and said he'd issue a ruling later. He didn't give a deadline for a decision.

The loan, from a group led by Zurich-based Credit Suisse Group, would cover everything from a $250,000 state land lease that hasn't been paid since 2009, $50,000 in winterization of unfinished buildings, $303,000 to pay new management, and an estimated $635,000 in lawyers' fees to complete Tamarack's proposed sale.

Still, lawyers representing construction companies, sewer districts and others owed millions are fighting the loan proposal, insisting Credit Suisse and other lenders are just trying to gain an unfair advantage by demanding the loan be paid back first.

U.S. Trustee David Newman described the loan's terms _ a 15 percent interest rate and a short six-month repayment deadline _ as "so onerous that the debtor (Tamarack) is set up to fail."

Newman predicted a sale would fall through and the loan would default. "Ultimately, this is a sign of predatory lending," he argued.

Credit Suisse and other lenders hope the sale of Tamarack's lifts and development land will help them recover a slice of the $300 million they are owed after Tamarack defaulted on a construction loan in 2008.

The Swiss bank's lawyers insisted lenders were extending the money solely to ensure an orderly sale process and to prevent Tamarack assets from being sold for scrap.

Without the loan, they contend, the land on which Tamarack's ski lifts sit could be returned to cattle grazing and timber, leaving vacation homes stranded without amenities.

"The property will be rendered virtually worthless if it's not sold in its entirety," said Elizabeth Walker, a Credit Suisse lawyer.

The bank's plan calls for Michael Fleischer, a lawyer whose California-based real-estate consulting firm specializes in distressed properties, to run the resort until a buyer is found.

On Wednesday, Fleischer said in court that the plan from homeowners in the Tamarack Municipal Association to open the ski area Dec. 20 is "not a necessity," but that firing up lifts could help make the resort more attractive to a potential buyer.

"I don't think it hurts to have some life in the equipment," Fleischer said.

Homeowners are counting on Myers to approve the loan, saying it's pivotal to their reopening plans.

Tamarack, located 90 miles north of Boise, last ran its lifts in March 2009 before lenders refused to provide more cash.

Jean-Pierre Boespflug, Tamarack's majority owner, has so far lost $45 million in his own money in Tamarack, which soured starting in 2007 as construction spending outstripped the resort's cash and new lenders fled the imploding real-estate market.

Boespflug backs the loan plan and has agreed to resign from management _ if Myers' gives it his blessing.

He said there are three "letters of intent" from potential buyers.

The offers range from at least $30 million to at least $42 million, the amount being offered by Salt Lake City-based Pelorus Group.

Aaron Wernli, a Pelorus representative, was in Myers' courtroom and said after Wednesday's hearing his company's interest could hinge on the loan decision.

"If the loan is approved, we'll proceed at 100 miles per hour," Wernli said. "If it isn't, we'll have to re-evaluate."