Ultimate Escapes Committee of Unsecured Creditors Appointed

By: Destination Club News
Date: October 5, 2010

The Ultimate Escapes bankruptcy continues to dominate headlines across the destination club industry. The club has recently terminated Jim Tousignant as their CEO and President, greatly reduced the number of properties currently available to members, and have executed nearly 40 non-disclosure agreements with potential buyers, actively working with a small handful in advanced discussions. The situation has also spread across the industry, as Quintess, Exclusive Resorts, and The Discovery Club have already introduced new offers to Ultimate Escapes members while newcomers like The Demeure Club and Second Home Destinations also seek to fill the void left by Ultimate Escapes.

Last week, the Committee of Unsecured Creditors was appointed, collecting a group of members and organizations close to the situation. The Committee includes:

  • Trump International Hotel & Tower
  • Strauss Zelnick
  • Clive Buckley
  • World Hotels
  • Creg McDonald
  • Marcus Acheson
  • George Rose

On September 21, 2010, Ultimate Escapes filed a motion requesting an order to effectively sell all of the club's assets. The proposed timeline would include a bidding deadline ending October 15 with an auction on October 18 and a sale hearing on October 20, just a short month after the bankruptcy filing.

Promptly, the Unsecured Creditors Committee has filed an objection to this plan.

"The Committee objects to the Bid Procedures Motion because the Bid Procedures:

  1. require that the Sale occur on an extremely expedited basis solely for the benefit of the Secured Lenders in an attempt to chill all competing Bids,
  2. intentionally exclude the Committee from participating in the Sale, determining Qualified Bidders, evaluating Bids and selecting the highest and best Bid and
  3. includes an Expense Reimbursement for the Secured Lenders and a success fee of one percent (1%) of any Bid other than the Stalking Horse Purchaser’s Bids for CRG Partners Group LLC ("CRG"), neither of which represent actual, necessary costs of preserving Debtors’ estate.

"The Committee objects to the extremely short timeline in which the Debtors propose to market, auction and sell their assets. The Debtors only commenced marketing the Assets in August 2010. All pre-petition marketing efforts were performed by CRG, the restructuring advisor engaged by Debtors as required by the pre-petition forbearance with the Secured Lenders. Despite CRG having identified 400 potential buyers, 35 of which received non-disclosure agreements, 23 of which executed non-disclosure agreements and four of which submitted letters of intent, the Secured Lenders were selected to serve as the Stalking Horse Purchaser. Now the Debtors seek approval of lightening fast Bid Procedures. The Committee suspects that the Debtor and Secured Lenders’ actions are an attempt to hinder bidding and ensure that the Stalking Horse Purchaser is the winning bidder and, thus, allow the Secured Lenders to complete what is nothing more than a court-sanctioned foreclosure sale."

The Unsecured Creditors Committee advocates, at a minimum, the delay of all proposed deadlines by one month, making the bid deadline November 15, the auction November 18, and a sale hearing the week of November 22, 2010.

A meeting of creditors is scheduled for October 28 at 11:00 AM at the J. Caleb Boggs Federal Building in Wilmington, Delaware.

The sale of dozens of vacation properties scattered throughout the world isn't something that can be done overnight. This sentiment is echoed by the US Trustee who also believes that the filing is proceeding too quickly. Check back soon for more information about Ultimate Escapes and their ever fluid bankruptcy filing.