Ultimate Escapes Chief Restructuring Officer Sheon Karol Reaches Out To Members About Bankruptcy

By: Destination Club News
Date: September 22, 2010

Late last month, Ultimate Escapes appointed Sheon Karol to serve as the club's Chief Restructuring Officer with bankruptcy looming for the world's second largest destination club. Earlier this week, Ultimate Escapes filed for bankruptcy, estimating between 1,000 and 5,000 creditors, $10 million and $50,000 million in assets, and $100 million to $500 million in estimated liabilities. With the club evaluating the various options still available, Karol sent a message out to members regarding his role and the plans for the Ultimate Escapes in the coming months.

Members of Ultimate Escapes,

I fully appreciate the concerns and frustrations that you have as a result of the Company filing bankruptcy. Our goal is to address these issues in the most complete and effective manner possible. To that end, the Company has established a number of channels to provide information to, and communicate with, the members: a member communication has been sent to you that provides detailed information; information has been posted to both the public website and the member-only website; and an email address (bankruptcy@ultimateescapes.com) has been established to allow members to submit questions. While I would like to address all of your concerns personally, it is simply not feasible given my responsibilities and the fact that we have over 1200 members. So please use these avenues of communication.

I regret the inconvenience and distress caused by cancellation of reservations. Unfortunately, the Company lacked the financing to operate locations other than those listed on yesterday’s communication.

I would next like to turn to the process. We anticipate that the bankruptcy process in effect will likely take between 30 and 45 days. We are attempting to arrange the sale of the Company’s assets to another destination club, hospitality company, or investment group with the hope that the current members can find a new home for their membership. We are also exploring the possibility that a member group could be formed to organize and formulate a bid for the Company’s assets. If none of these options is successful, however, the assets of the Company will be sold to Capital Source Bank, the Company’s largest secured lender. We do not know what direction the cases will take but will update you as and when possible.

Finally, I would like advise you of my role as Chief Restructuring Officer ("CRO") in the process. As CRO, I am responsible for managing the bankruptcy and reorganization process. In this connection, I work with the management team and their staff employees.

I assure you that I, the CRG team, and the Company are working hard to obtain the best outcome possible, and to make the process as smooth as we can.

Sincerely,

Sheon Karol
Chief Restructuring Officer

Ultimate Escapes members were contacted earlier in the week, announcing that much of the club's property portfolio would be terminated and that the company had funding as a Debtor in Possession until October 19, 2010.

Ultimate Escapes members still are unsure about what will happen with their future travel, but many options are still available. Exclusive Resorts and Quintess have both introduced options to club members and if a party elects to purchase the assets of Ultimate Escapes collectively, a reorganized Ultimate Escapes 2.0 could be a distinct possibility.

Following the bankruptcy, more information about Ultimate Escapes will continue to leak out. Please continue checking back for more daily updates about the destination club industry and the fate of Ultimate Escapes.