Jim Tousignant Out At Ultimate Escapes

By: Destination Club News
Date: September 29, 2010

In a move predicted by many, Jim Tousignant has been relieved of his duties as President and CEO of Ultimate Escapes after the club's bankruptcy filing earlier this month, the largest in the history of the destination club sector.

"On September 23, 2010, the Board of Directors (the 'Board') of Ultimate Escapes, Inc. (the 'Company') removed James M. Tousignant as President and Chief Executive Officer of the Company, and terminated Mr. Tousignant’s employment with the Company, for 'cause' (as defined in Mr. Tousignant’s employment agreement with the Company)," the Ultimate Escapes 8-K filing stated. "At this time, Mr. Tousignant continues to serve as a member of the Board. The Board has not appointed a replacement President or Chief Executive Officer at this time. The Board has, however, expanded the authority of Sheon Karol, a partner at CRG Partners Group, LLC ('CRG') who had previously been appointed to serve as Chief Restructuring Officer of the Company's subsidiary Ultimate Escapes Holdings, LLC ('UEH') (as described in the Current Report on Form 8-K filed by the Company on August 31, 2010), such that Mr. Karol is now also responsible for the oversight and direction of the day to day operations of the Company."

Eleven months ago today, Tousignant signed an employment agreement for three years with the company. According to the agreement, Tousignant would be paid an initial salary of $450,000 per year and "periodic adjustments of no less than 10% annually." In addition, he would receive a "performance-based bonus" and a $2,000 per month vehicle expense. These large salary figures and benefits were staggering as just nine months prior to inking the agreement, Ultimate Escapes and Tousignant required members to pay a one-time assessment that gave the club $16 million needed to remain operational. "The 2009 Assessment, which was painful for everyone concerned, proved to be the very best thing we could have done to ensure your Club continued to operate, and this was only possible because of the commitment and support of our Members," Tousignant wrote to members early this year. As the Ultimate Escapes bankruptcy now looms over the entire industry, it seems that the one-time assessment merely prolonged the inevitable.

A number of choice adjectives have already been used by the near 1,300 Ultimate Escapes members to describe Tousignant and the rest of the Ultimate Escapes leadership team, but one accurate description could be "late."

Then the Founder of Ultimate Resort, Tousignant agreed to purchase the bankrupt Tanner & Haley in 2006 for roughly $100 million. The acquisition wouldn't close until well into 2007.

In September of 2007, Ultimate Resort and Private Escapes announced the signing of a $200 million merger agreement. Yet again, the actual completion of the merger wouldn't take place in a timely manner, taking two years and the insistence of Secure America Acquisition Corporation to finalize.

Despite being tight on money virtually since inception, Ultimate Escapes would include three corporate offices spread across the nation. The club wouldn't close their Colorado branch until just last month, already several months after defaulting on their loan agreement with lender CapitalSource and years after when the division likely should have been terminated.

When Tousignant announced that the club was "in crisis" earlier this month via webinar, he advocated members supporting a conversion to a member-owned model. During the presentation, Tousignant stated that he and Chairman Richard Keith were not currently taking a salary and would be "willing to, after closing of a conversion, reduce our salaries by 50% until the company becomes cash flow breakeven." Even at the proposed reduced rate, the combined salaries of Tousignant and Keith would amount to well over $400,000 per year. On the brink of bankruptcy, Tousignant's no salary announcement again came too late to members who were quick to strike down the member-owned conversion, speaking volumes for the faith members had in club management.

With Karol at the helm, the Ultimate Escapes bankruptcy should continue to make progress and with a newfound focus now that the point person of the proceedings has been determined. Look for more news about the club to emerge as today they will be in court determining the future of Ultimate Escapes. Check back soon for more details.