LUSSO Collection Files For Chapter 11 Bankruptcy
By: Destination Club News
Date: December 5, 2008
Long a popular destination club option due to their unlimited annual travel benefits, 100% membership refund, and demonstrated high service levels, The LUSSO Collection has filed for Chapter 11 bankruptcy. "The current national financial crisis has resulted in a precipitous drop in new member enrollments and a significant contraction in the availability of debt financing, which has affected the club’s ability to acquire new properties and service existing obligations," the club released.
Founded in 2005 and limited to just 550 total members, The LUSSO Collection would sell primarily on their "boutique" membership appeal, growing primarily through referrals virtually since inception. In a survey of members conducted last year, LUSSO Collection received world-class ratings across nearly all levels, including:
- Unlimited Usage - 97%
- Projected Occupancy Rate - 98%
- Fully Refundable Membership Deposit - 93%
- Quality of Residences - 100%
- Availability of Residences - 93%
- Online Reservation System - 100%
- Concierge Communication and Responsiveness - 99%
- DepositTrust™ For Financial Security and Reporting Transparency - 90%
"DepositTrust™ is where the club commits that all of the real estate that it purchases will be held in subsidiary LLCs, the shares all of which are pledged directly to the trust," said LUSSO Collection Founder Steve Greer in an interview with Joan Steffend. "What it does is actually elevates the members' position to that of a secured creditor of the club rather than an unsecured creditor of the club." According to the bankruptcy documents, LUSSO estimates creditors to number between 200-999 and both assets and liabilities between $50 million and $100 million. LUSSO does believe that "funds will be available for distribution to unsecured creditors."
LUSSO is just the latest destination club to be adversely affected by the current economic climate. Young clubs Diamante Residences and Botiga have both elected to suspend their respective launches while established clubs like Exclusive Resorts and Ultimate Escapes have begun to cut costs to better weather the storm. High Country Club has been restructuring their destination club since October and continues to combat a difficult economy. Clubs of every size and scale are seeing sharp declines in interest over the past several months as luxury travelers monitor their own financial footing.
"With the crash of the financial markets and the freezing of the capital markets, new membership applications disappeared almost overnight," bankruptcy documents stated. "Beginning in November, 2008, VREP lacked sufficient cash to pay all of the scheduled lease and mortgage payments due on the properties."
Members will be able to continue traveling and we are told that the LUSSO Collection executive team is diligently working to find a solution to help save the club. The fate of over 150 LUSSO Collection rests in the balance and we hope that the club and/or its members can discover a suitable answer.
If you are a LUSSO Collection member and would like to comment on this news or your experiences with the club, please feel free to contact us at email@example.com.