4838-4680-8848.

1
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLORADO




In re

CORDILLERA GOLF CLUB, LLC dba The Club
at Cordillera,

Tax ID / EIN: 27-0331317

Debtor.

Case No. 12-24882 ABC

Chapter 11



DEBTORS STATUS REPORT AS REQUESTED BY COURT
I.
INTRODUCTION
The Debtor, Cordillera Golf Club, LLC, dba The Club at Cordillera, filed its
Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware
(the Delaware Court) on June 26, 2012. On July 16, 2012, after holding a full day trial
with live witness testimony, Judge Christopher Sontchi ordered the case transferred to
this Honorable Court. The written transcript of Judge Sontchis ruling (but not the full
180+ additional pages of trial testimony) is attached hereto as Exhibit A for the benefit
of the Court and parties in interest.
The current equity owners of the Club acquired the Club under unusual
circumstances in 2009. Prior to that time, the current owners were minority owners of
the Club, and the majority owners sought to sell the Club to a group of members at a
purchase price of $24.5 Million, an amount that would have returned virtually nothing to
the minority owners, and an amount which proved to be roughly 50% of the Clubs then
appraised value. The minority owners asserted that the Club could not be sold absent
their consent, and commenced litigation. The arbitrator ultimately agreed with the
minority owners, and entered a significant judgment in favor of the minority owners. In
satisfaction of the judgment, the majority owners transferred all of their ownership of the
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page1 of 13
2
4838-4680-8848.1
Club to the minority owners, who are now directly and indirectly the 100% owners but
not before the majority owners drained all the cash from the Club. The Debtor borrowed
$13.7 Million from Alpine Bank; and its current owners loaned the Club approximately
another $7.5 Million to make dramatic improvements. By all accounts, the quality of the
facilities and services were noted as greatly improved by everyone affiliated with the
Club.
Beginning in approximately August 2010, relationships between the Debtor, some
of its members, and some of the surrounding non-member homeowners began to sour.
The Club filed litigation against some of these parties in the Spring of 2011, asserting
claims for damages, and that case is currently pending in District Court, Eagle County,
State of Colorado (Colorado District Court) as Case No. 2011 CV 456, Cordillera Golf
Club, Inc., et al. v. Cordillera Transition Corporation, Inc., et al. In response, about a
month later, certain persons filed a Class Action case against the Debtor seeking damages
for alleged breach of contract, and that case is currently pending in Colorado District
Court as Case No. 2011 CV 552, Cheryl M. Foley, et al. v. Cordillera Golf Club LLC,
et al.
The Debtor filed this chapter 11 case because its loan to Alpine Bank came due on
June 26, 2012, and prior to that time, Alpine Bank had been unwilling to extend the due
date on terms that were acceptable to the Debtor. The Debtor faces financial difficulties
because, after undertaking the expenditure of several millions of dollars in facility and
service improvements since acquiring the Club in early 2009, many members refused to
pay dues in 2011 and/or 2012. As a result of the cash flow problems caused by the
significant failure to pay dues, the Club was forced to cut back services. The cutback
fueled further issues between the parties.
The Debtor believes that the Chapter 11 case is about a rehabilitation of the Club,
and not a liquidation or wholesale 363 sale, which rehabilitation the Debtor believes will
benefit all of the members of the Club.
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page2 of 13
3
4838-4680-8848.1
At this juncture, the Debtor and Alpine Bank, with the anticipated support of the
Official Committee of Unsecured Creditors, have entered into an Interim DIP and Cash
Collateral Order which will provide sufficient cash for the Debtor to operate it facilities
for the benefit of its members through August 31, 2012. Alpine Bank and the Debtor will
be seeking approval of such order by the Court, and request a hearing on Wednesday,
July 25, 2012, to be heard on such approval if the matter cannot be otherwise heard
prior to that time as the Debtor is in need of immediate cash. It is anticipated by the
parties that they will meet during the next week of the case to determine the extent to
which there can be a meeting of the minds on a path forward in the case.
As soon as practicable, it is the Debtors intention to file a plan of reorganization
which will provide for a rehabilitation of the Debtor, which will benefit creditors of the
estate. By reaching an agreement with Alpine Bank concerning the funding of an interim
DIP loan which will facilitate operations through August 31, 2012, the Debtor fully
expects to be able to demonstrate the viability of securing a tiered capital investment, and
the employment of a professional golf management company, to restore vitality to the
Club, and support the benefits of Club membership for all members.
II.
STATUS REPORT
1. The above-captioned debtor and debtor-in-possession (the "Debtor") hereby
submits the within Status Report (the "Status Report"). The Status Report is in response
to the Court's order entered on July 17, 2012 [Dkt. No. 79].
1

2. A more detailed description of the Debtor's business and the reasons for
commencing this Chapter 11 case are set forth in the Affidavit of Daniel L. Fitchett, Jr. in
Support of Chapter 11 Petition and First Day Relief, filed on the Petition Date [Dkt.
No. 4] (the "First Day Affidavit").

1
All docket entry numbers in the Status Report refer to docket entry numbers in Case No. 12-24882
pending in the United States Bankruptcy Court for the District of Colorado unless otherwise stated.
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page3 of 13
4
4838-4680-8848.1
III.
FIRST DAY MOTIONS AND ORDERS THEREON
3. The Debtor filed various First Day Motions ("First Day Motions") which
are set forth below. All of which were granted as set forth in the orders entered by the
Delaware Court. The descriptions below include whether an interim order was entered
and whether any objection(s) have since been filed.
a. Motion for Order Authorizing (I) Payment of Certain Prepetition
Taxes and Fees, and (II) Financial Institutions to Process and Cash
Related Checks and Transfers [Dkt. No. 8] ("Payment /Financial
Institution Motion"). An Interim Order on the foregoing motion was
entered by the Delaware Court on June 27, 2012 [Dkt. No. 44]. A
timely objection was filed on July 13, 2012. A hearing date was
previously set to occur on July 27, 2012, in the Delaware Court.
b. Motion for an Order (I) Prohibiting Utility Companies from
Altering, Refusing, or Discontinuing Utility Services, (II) Deeming
Utility Companies Adequately Assured of Future Performance,
(III) Establishing Procedures for Determining Adequate Assurance
of Payment; and (IV) Setting a Final Hearing Related Thereto [Dkt.
No. 9] ("Utility Motion"). An Interim Order on the foregoing
motion was entered by the Delaware Court on June 27, 2012 [Dkt.
No. 45]. A timely response was filed on July 13, 2012. A hearing
date was previously set to occur on July 27, 2012, in the Delaware
Court.
c. Application to Employ/Retain (I) Designate Alfred H. Siegel as
Chief Restructuring Officer, and (II) Retain and Employ Crowe
Horwath, LLC, Nunc Pro Tunc to the Petition Date [Dkt. No. 10]
("CRO Motion"). No interim order was entered; however, a notice
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page4 of 13
5
4838-4680-8848.1
of hearing on the CRO Motion was filed in the Delaware Court on
June 28, 2012 setting forth objection and hearing dates [Dkt.
No. 52]. A timely objection was filed on July 13, 2012. A hearing
date was previously set to occur on July 27, 2012, in the Delaware
Court.
d. Motion for an Order (A) Authorizing Use of Cash Collateral;
(B) Granting Adequate Protection, and (C) Scheduling a Final
Hearing [Dkt. No. 11] (the "Cash Collateral Motion"). An Interim
Order on the foregoing motion was entered by the Delaware Court
on June 27, 2012 [Dkt. No. 46] (the "Cash Collateral Order"). A
hearing date was previously set to occur on July 27, 2012, in the
Delaware Court.
e. Application to Appoint Claims/Noticing Agent Omni Management
Group, LLC [Dkt. No. 5]. The Delaware Court entered on order the
foregoing application on June 27, 2012 [Dkt. No. 47].
f. Motion for an Order (I) Approving Continued Use of Cash
Management System, (II) Authorizing Waiver of Certain Bank
Account and Related Requirements of the Office of the United
States Trustee for the District of Delaware, and (III) Waiving the
Requirements of 11 U.S.C. 345(b) on an Interim Basis [Dkt.
No. 6]. The Delaware Court entered on order the foregoing motion
on June 27, 2012 [Dkt. No. 42].
2

g. Motion for an Order (I) Authorizing Debtor to (A) Honor All
Obligations Under the Client Services Agreement for Payment of

2 The Order entered on the Cash Management System Motion is stated to be interim; however, no further
proceedings are set for the Cash Management System Motion, and the notation of interim appears to be a mistake
this is a final order.
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page5 of 13
6
4838-4680-8848.1
Prepetition Employee Wages and for Certain Employee Benefit
Programs and to Continue to Honor Such Obligations in the
Ordinary Course of Business, and (B) Make Payments in Connection
with Certain Other Prepetition Employee Benefit Programs Provided
Directly By Debtor and to Continue the Employee Benefit Programs
in the Ordinary Course of Business; and (II) Authorizing Applicable
Banks and Other Financial Institutions to Honor and Pay All Checks
and Transfers Drawn on the Debtor's Accounts to Make the
Foregoing Payments [Dkt. No. 7]. The Delaware Court entered on
order the foregoing motion on June 27, 2012 [Dkt. No. 43].
For the ease of the Court and the parties, in consultation with the Office of
the United States Trustee for this District, the Debtor consents to all parties having
through and including the Close of Business on July 24, 2012 to file objections, to
the extent not already filed, to said motions (a-g) above. It remains the Debtors
objective to have such motions heard on August 1, 2012, and the Debtor invites any
party having concerns or questions with any such motion to contact counsel for the
Debtor.
IV.
RETENTION OF COUNSEL
As the Debtor informed the Delaware Court, the Debtor anticipates some difficulty
in retaining local counsel in this case. The Debtor had arranged for local counsel to
assist the Debtor, but as of approximately 3 p.m. Mountain Time on July 18, 2012,
proposed counsel indicated that they were conflicted; subsequent counsel indicated the
same. The Debtor hopes to retain local counsel prior to the hearing on the Status
Conference herein, and appreciates the Courts indulgence while a diligent search is
conducted.
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page6 of 13
7
4838-4680-8848.1
V.
PENDING MOTIONS
4. All motions set forth below are currently pending with a previously set
hearing date of July 27, 2012, in the Bankruptcy Court for the District of Delaware
("Delaware Court") except for the DIP Motion (see infra Section II(m)). The Debtor
requests, if possible with the Court's calendar, that the following motions be heard on
August 1, 2012. All motions set forth below (a-m) were set to have an objection deadline
of July 20, 2012, in the Delaware Court except for the following: (a) the Payment
/Financial Institution Motion (see supra Section I(a)); (b) the Utility Motion (see supra
Section I(b)); (c) the CRO Motion (see supra Section I(c)); and (d) the DIP Motion (see
infra Section II(m)).
a. The Payment /Financial Institution Motion.
b. The Utility Motion.
c. The CRO Motion.
d. The Cash Collateral Motion.
e. Application of the Debtor for an Order Authorizing the Retention
and Employment of Young Conaway Stargatt & Taylor, LLP as
Delaware Bankruptcy and Conflicts Counsel, Nunc Pro Tunc to the
Petition Date [Dkt. No. 109].
f. Application of the Debtor for an Order Authorizing the Retention
and Employment of PricewaterhouseCoopers LLP as Financial
Advisor to the Debtor, Nunc Pro Tunc to the Petition Date and
Waiving Certain Requirements Pursuant to Local Rule 2016-2 [Dkt.
No. 110].
g. Application to Employ/Retain GA Keen Realty Advisors, LLC as
Real Estate Advisor for the Debtor and Debtor in Possession Nunc
Pro Tunc to the Petition Date and Waiving Certain Requirements of
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page7 of 13
8
4838-4680-8848.1
Local Rule 2016-2 [Dkt. No. 111].
h. Motion to Approve Order Establishing Procedures for Interim
Compensation and Reimbursement of Expenses of Professionals
[Dkt. No. 112].
i. Motion to Authorize the Debtor to Retain, Employ, and Compensate
Certain Professionals Utilized in the Ordinary Course of Business
[Dkt. No. 114 in the Delaware Court Case No. 12-11893].
j. Application of the Debtor for an Order Authorizing the Retention
and Employment of Foley & Lardner LLP as General Bankruptcy
Counsel for the Debtor Nunc Pro Tunc to the Petition Date [Dkt. No.
116 in the Delaware Court Case No. 12-11893].
k. Application of the Committee for an Order Authorizing the
Retention and Employment of Munsch Hardt Kopf & Harr, P.C. as
Counsel to The Official Committee of Unsecured Creditors of
Cordillera Golf Club, LLC, Nunc Pro Tunc, to July 9, 2012 [Dkt.
No. 130, 131 and 132 in the Delaware Court Case No. 12-11893].
l. Application of the Committee for an Order Authorizing the
Retention and Employment of Saul Ewing LLP as Co-Counsel to the
Official Committee of Unsecured Creditors, Nunc Pro Tunc to July
10, 2012 [Dkt. No. 133 in the Delaware Court Case No. 12-11893].
m. Motion for Entry of Interim and Final Orders (I) Authorizing the
Debtor to Obtain Post-Petition Secured Financing, (II) Granting
Security Interests and Superpriority Administrative Expense Claims,
(III) Granting Adequate Protection to Pre-Petition Secured Parties,
(IV) Authorizing the Use of Cash Collateral as Provided Herein, and
(V) Scheduling a Final Hearing Filed by Cordillera Golf Club, LLC

Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page8 of 13
9
4838-4680-8848.1
[Dkt. No. 59] (the "DIP Motion"). The DIP Motion was previously
set for hearing on July 19, 2012, in the Delaware Court.
For the ease of the Court and the parties, in consultation with the Office of
the United States Trustee for this District, the Debtor consents to all parties having
through and including the Close of Business on July 24, 2012 to file objections, to
the extent not already filed, to said motions (a-m) above. It remains the Debtors
objective to have such motions heard on August 1, 2012, and the Debtor invites any
party having concerns or questions with any such motion to contact counsel for the
Debtor.
VI.
PENDING OBJECTIONS
5. The Payment /Financial Institution Motion. The Official Committee of
Unsecured Creditors (the "OCC") filed a limited objection the Payment /Financial
Institution Motion on July 13, 2012 [Dkt. No. 170 in the Delaware Court Case No. 12-
11893]. The Debtor expects to contact the OCC to reach an understanding, and if not, to
file a response.
6. The Utility Motion. The OCC filed a limited response to the Utility Motion
on July 13, 2012 [Dkt. No. 171 in the Delaware Court Case No. 12-11893]. The Debtor
expects to contact the OCC to reach an understanding, and if not, to file a response.
7. The CRO Motion. Objections to the CRO Motion were filed on July 13,
2012, by: (a) Cordillera Metropolitan District and Cordillera Property Owners
Association, Inc. [Dkt. No. 168 in the Delaware Court Case No. 12-11893]; (b) Cheryl
M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson and Kevin B.
Allen individually and as representatives of a certified class of members ("Class Action
Plaintiffs") [Dkt. No. 169 in the Delaware Court Case No. 12-11893]; and (c) the OCC
[Dkt. No. 172 in the Delaware Court Case No. 12-11893]. The Debtor does not believe

Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page9 of 13
10
4838-4680-8848.1
these objections are well taken. The Debtor expects to contact the opposing parties to
reach an understanding, and if not, to file a response.
8. The DIP Motion. The following objections to the DIP Motion were filed
on July 12, 2012, by: (a) the OCC [Dkt. No. 147 in the Delaware Court Case No. 12-
11893]; and (b) Cordillera Metropolitan District and Cordillera Property Owners
Association, Inc. [Dkt. No. 148 in the Delaware Court Case No. 12-11893]. On July 13,
2012, Alpine Bank filed its objection to the DIP Motion [Dkt. No. 175 in the Delaware
Court Case No. 12-11893]. On July 13, 2012, the Class Action Plaintiffs filed their
joinder to the objections previously on file to the DIP Motion [Dkt. No. 176 in the
Delaware Court Case No. 12-11893]. The Debtor does not anticipate moving forward on
the DIP Motion as currently postured, without prejudice, and seeks to contact the
opposing parties to reach an understanding, and if not, to proceed forward with a
modified DIP Motion.
VII.
STATUS OF NEGOTIATIONS
9. As indicated above, the Debtor and Alpine Bank have agreed in principal to
the terms of an Interim DIP Financing agreement and extension of the current cash
collateral order. The Debtor anticipates the OCC will consent, and that the OCC will
encourage the Cordillera Transition Corporation (the CTC), the Class Members and the
Cordillera Property Owners Association (the CPOA) to support the entry of such
proposed agreed order on July 25, 2012.
10. The authority for the Debtor to use cash collateral terminates on July 27,
2012 as further set forth in the Cash Collateral Order, but is extended until August 31,
2012 under the terms of the proposed Interim DIP Order discussed above.
11. As set forth above, the hearing on the Debtor's DIP Motion was set for
July 19, 2012. Discovery commenced related to the DIP Motion. Depositions have been
taken of the Debtors appraiser, and an officer of Alpine Bank. The following
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page10 of 13
11
4838-4680-8848.1
depositions were previously noticed as follows: (a) the deposition of the Debtor's
corporate designee by Alpine Bank was previously scheduled for July 23, 2012; (b) the
deposition of the corporate designee of Alpine Bank by the Debtor was previously
scheduled for July 24, 2012; and (c) the deposition of Alpine Banks appraiser was set for
July 19, 2012. Alpine Bank and the Debtor have been extremely cooperative in pursuing
a discovery plan.
Because the OCC is comprised of a majority of persons who are involved in active
litigation with the Debtor, participation of the OCC and the sharing of confidential
proprietary information of the Debtor with OCC members cannot take place, and creates
a potentially insurmountable conflict in the future of the Case. The Debtor has discussed
the participation of the OCC on an attorneys eyes only basis until such time as an
appropriate protective order and confidentiality agreement can be reached.
VIII.
ANTICIPATED AMENDMENTS TO MOTIONS OR APPLICATIONS, OR
OTHER CHANGES, DUE TO CHANGE OF VENUE
12. The DIP Motion was previously set to be heard by the Delaware Court on
July 19, 2012. In light of the Debtors interim DIP agreement with Alpine Bank, which
will fund the Debtor through August 31, 2012, if this matter goes forward, the Debtor
will expect to set same for the week of August 27, 2012.
13. The Debtor's counsel, Foley & Lardner LLP, filed an employment
application on July 10, 2012, which describes Young Conaway Stargatt & Taylor LLP as
local counsel and conflicts counsel as further set forth therein. The Debtor anticipates
filing a supplemental declaration of Christopher Celentino to disclose new local and
conflicts counsel located in Colorado.
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page11 of 13
12
4838-4680-8848.1
IX.
ADVERSARY PROCEEDINGS
14. On July 2, 2012, the Debtor filed a Complaint for Declaratory and
Injunctive Relief Under Section 362 of the Bankruptcy Code or Sections 105 and 362 of
the Bankruptcy Code or, Alternatively, a Preliminary Injunction Under Rule 7065 of the
Bankruptcy Rules by Cordillera Golf Club, LLC against Cheryl M. Foley, Thomas
Wilner, Jane Wilner, Charles Jackson, Mary Jackson, Kevin B. Allen, Alpine Bank. The
Debtor expects to dismiss the within complaint, without prejudice.
15. On July 2, 2012, the Debtor filed a Complaint to Determine Validity, Priority,
Perfection and Extent of Lien; for Declaratory Relief; and Avoidance of Lien by Cordillera Golf
Club, LLC against Alpine Bank. Pursuant to the Interim DIP Order to be submitted herein, the
Debtor would expect to hold the matter in abeyance, and not serve the summons, for as long as
practicable under local practice.
X.
INTERIM ORDERS AND OMNIBUS HEARING DATES
16. No other interim orders have been entered other than those related to the
First Day Motions set forth above.
17. The Delaware Court set the following omnibus hearing dates pursuant to
two entered orders on June 28, 2012 and July 3, 2012 [Dkt. No. 54 and 72, respectively]:
July 27, 2012 at 1:00 p.m. (ET); August 23, 2012 at 1:00 p.m. (ET); September 20, 2012
at 2:00 p.m. (ET); and October 15, 2012 at 11:00 a.m. (ET). The Debtor request that
omnibus hearing dates, if possible and consistent with the Court's calendar, be reserved
on the Court's calendar; and further, that if the above dates are available, that same be
selected by the within Court.
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page12 of 13
Case:12-24882-ABC Doc#:193 Filed:07/19/12 Entered:07/19/12 11:53:01 Page13 of 13
Dated: Denver, Colorado
July 19, 2012
4838-4680-8848.1
Respectfully submitted,
Is/ Ann Marie Uetz
FOLEY & LARDNER LLP
Ann Marie Uetz
Ryan S. Bewersdorf
500 Woodward Avenue, Suite 2700
Detroit, Michigan 48226
Telephone: 313-234-7114
Facsimile: 313-234-2800
Email: auetz@foley.com
Email: rbewersdorf@foley. com
Christopher Celentino (CA No. 131688)
Mikel Bistrow (CA No. 1 02978)
Erika Morabito (VA No. 44369)
Pro Hac Vice Applications To Be Filed
402 West Broadway, Suite 2100
San Diego, California 92101
Telephone: 619-234-6655
Facsimile: 619-234-3510
Email: ccelentino@foley.com
Email: mbistrow@foley.com
Email: emorabito@foley.com
Proposed Counsel for Debtor and Debtor in
Possession
13
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page1 of 19
EXHIBIT A
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page2 of 19
1
2
3 IN RE:
UNITED STATES BANKRUPTCY COURT
DIS'I'RIC'l' OF DELAWARE
Case No. 12-11893 (CSS)
Chapter 11
4 CORDILLERA GOLF CLUB, LLC,
Dba The Club at Cordillera,
5 Courtroom No. 6
Debtor.
6
7
Market Street
Wilmington, DE 19801
July 16, ?012
8 10:00 A.M.
9 TRANSCRIPT OF HEARING
BEFORE HONORABLE CHRISTOPHER S. SONTCHI
10 UNITED STATES BANKRUPTCY JUDGE
11 APPEARANCES:
12 For the Debtor:
13
14
15
16
17
18 ECRO:
19 Transcription Service:
20
21
Young Conaway Stargatt & Taylor
By: JOSEPH B.ARRY, ESQUIRE
1000 West Street, 17Lh floor
Wilmington, Delaware 19899
{302) 571-6600
Foley & Lardner LLP
By: CHRISTOPHER CELENTINO, ESQUIRE
402 West Broadway, Suite 2100
San Diego, California 92101
(619) 234-66:>5
MURIN
Reliable
1007 N. Orange Street
Wilmington, Delaware 19801
Telephone: ( 302) 6!54-8080
E-Mail:
22 Proceedings recorded by electronic sound recording:
transcript produced by transcription service.
23
24
25
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page3 of 19
1 For Cordillera Property
Owners/Cordillera
2 Metropolitan District:
3
4
5
6
7 E'er Alpine Bank:
8
9
10 For the Conun.i.t tE!es:
11
12
13 For Class Mr:-)mber
Representati .. ve:
15
16 For David Wilhelm:
17
18
19 For Dr. Rush/Rush
Family Trust:
20
21
22 For DIP Lender:
24
25
Ashby & Geddes
By: RICARDO PALACIO, ESQUIRE
500 Delaware Avenue
Wilmington, Delaware 19899
(302) 6:)4-18GB
Sherman & Howard LLC
By: PETER CAL, ESQUIRE
633 Seventeenth Street
Denver, Colorado 80202
(303) 299-8244
Ballard Spahr
By: VINCE MARRIO'I"l'
1
ESQUIRE
1735 Market Street
Philadelphia, Pennsylvania 19103
(215) 665-8SOO
Munsch Hardt
By: JOSEPH WIELEBTNSKI, ESQUIRE
3800 Lincoln Plaza
Dallas, Texas 75201
(211) 855-7561
Richards Layton Finger
By: MARK COLLJ.N:S, r:SlJUJRr:
920 North King Street
Wilmington, Delaware 19801
{302) 651-7531
Duane Morris
By: JAMES HOLMAN, ESQUIEE:
30 South Street, 17th Floor
Philadelphia, Pennsylvania 19103
(215) 979-1530
Morris Nichols Arsht & Tunnell
By: DANIEL BUTZ, ESQUIRE
1201 North Market Street
Wilmington, Delaware 19899
(302) 65B-9200
Womble Carlyle
By: MATTHE\e.J E:SQUIHE
222 Delaware Avenue
Wilmington, Delaware 19801
( 302) 2 52-4 320
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page4 of 19
1 INDEX
3 OPENING STATEMENTS
For the Debtor, by Mr. Barry
4
5
E'or
For
F'or
Class Member Representatives, by Mr. Collins
CPOA and Cordillera l\1etro District, by Mr. Cal
Alpine Bank, by Mr. Marriott
For the Debtor, by Mr. Celentino
6 F'Ot' Mr. Wilhelm, by Holman
For Dr. Jeffrey Rush, by Mr. Butz
7
0
()
WITNESS(s) FOR THE
DEBTOR:
Direct Cross Redirect Recross
9 Nanette Kuich
Harold Bord; ..Jin
10
Dan:Lel Fitchett
11
12 CLOSING ARGUMENTS:
43
75
120
61
84
109
135
156
For Class Members, by Mr. Collins
71
113
164
13 For CPOA/Cordillera Metro District, by Mr. Cal
For Alpine Bank, by Mr. Marriott
14 F O l ~ the CommitteE:, by Mr. WifdE:binsk.i
For the Debtor, by Mr. Celentino
15
DECISION
16
17
18
19
20
21
22
23
24
25
3
r:
;)
10
20
23
28
39
41
Further
lXCCt;
167
173
1 ! J
176
182
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page5 of 19
l 94
1 to the runner, favors the debtor's choice; and since the
2 economic rehabilitation of the debtor and the evidence of
3 that favors venue here, I would suggest that venue here in
4 Delaware is proper.
6
7
f3
9
10
11
THE COURT: Thank you.
Anyone else from the debtor's side?
(No verbal response.}
THE COURT: All right. I'm going to-- well, I'll
probably need let's see. We're reconvene at quarter to 5,
and I'll give my ruling.
COUNSEL: Thank you, Your Honor. Thank you, Your
12 Honor. Thank you.
13 (Recess taken at 4:22p.m.)
14 (Proceedings resume at 4:50p.m.)
15 (Call to order of the Court.)
16 THE COURT: Please be seated.
17 First of all, I'd like to thank the parties and the
18 professionals for their professionalism and cooperation in
19 presenting a very efficient and interesting, and also helpful
20 presentation for the hearing today.
21 All right. Before I j urnp into the -- som.e of the
22 factors that are generally listed that the Court should
23 consider, I just want to make a couple, sort of global
24 preliminary findings/rulings/comments.
25 First of all, as we discussed, the case is properly
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page6 of 19
1 venued in Delaware. It was appropriate -- it was
2 an available venue as the state of incorporation -- or
3 actually the LLC.
4 But in any event (indiscernible) no stigma or bad
5 acting by a company to file bankruptcy in an available venue.
6 Delaware, under the law, is an available venue; Colorado,
7 under the law, is an available venue, and the debtor had the
8 choice of either. And to say that they're running away from
9 their creditors or they're doing something untoward in filing
10 the case in Delaware, really I don't think is a fair
11 characterization. It's not what the law should say.
12 7\nd to the extent that my coLLeagues or others havE";
13 made the type.s of comments that Judge Carey did about, you.
14 know, running away from creditors by filing in Delaware
15 should not be condoned, each case 1s -- is -- has to be
16 judged on its unique facts and circumstances. But as a
17 qeneral comment, I disagree with that. Delaware is
18 available, Delaware is appropriate, and there is nothinq
19 untoward in the fact that they filed in Delaware.
20 You normally don r t hold it against the d ( ~ b t o r for
21 filing Chapter 11 at all. I mean, that's something that
22 comes out of nowhere. It's designed, in part, to import
23 creditors. And of course, there's nothing untoward in filing
24 99.9 percent of your Chapter ll's. Obviously, there can be
25 bad-faith filings.
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page7 of 19
196
1 So having said that, obviously, the movants bear
2 the burden of establishing by a preponderance of the evidence
3 that moving the case to Colorado would be for the convenience
4 of the parties and/or the interest of justices.
5 'I' he Cctses say a "preponcier ance, " and then they say
6 the burden is heavy, courts should proceed cautiously. It's
7 a little difficult to sort of wrap your head around it. I
B think you can maybe argue that it's sort of a preponderance-
9 plus standard that has to be met. But I think that the fair
10 way, you know, to deal with it, and the appropriate way is
11 simply to apply a preponderance of the evidence requirement
12 that the movants have to meet. And you know, the tie goes to
13 the debtor. And really, that's -- that is the rule i.n ~ n y
14 case where the movant has the burden of proof. If you don't
15 meet the burden of proof, you lose.
16 And I found over the few years that I've been doinq
17 this job that, if I don't know what to do, the best thing t
18 do is to deny the motion, because if 1 don't know what to do,
19 the person trying to get me to do something has failed to
20 meet their burden.
21 So just having said that, just some other comments.
22 This is a really close decision, 1 have to say.
23 Whether it goes one way or the other, this 1s a very close
24 call. It comes down to the parties and how they're split.
~ ) ~ . "
< ) Even when they are split fifty/fifty -- you have the class
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page8 of 19
1 representatives, the homeowners association, the district,
2 the official comm:ittee, Alpine seeking to move the caS(':!. You
3 have the debtor, Dr. Rush, Mr. Wilhelm, the DIP lender,
4 property owners all opposing moving the case to
5 Colorado.
6 I think the point that was made by Lhe debtor at
7 one point about the committee being real1y the class
8 representatives/homeowners association in another guise,
9 really, I didn't view that as a negative cornment or
10 implication that the committee fulfill its fidudary dut:i.es.
11 I think the point simply was, to a certain <:extent, :it's
12 duplicati.ve:: to say that a committef: that has homrC!o.Jners and
13 class representatives on it also has -- also has, ln effect -
14 - is in effect carrying the water for its constituency.
15 And really, that's what committees are for. I
16 mean, they're designed to address this very issue, which is
17 you have a disparate group of unsecured creditors who, on an
18 individual basis, may not be able to afford to participate
19 significantly -- sufficiently in a Chapter 11, or to have
20 enough skin in the game to even take a shot at participating.
21 We appoint official committees to address that problem by
22 giving a disparate group of creditors a seat at the table,
23 with counsel paid for by the debtors.
24 So I note all this to sort of say that there is
some, J.f you will, duplication of effort on the pro--venue
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page9 of 19
198
1 side, but not enough really to affect it one way or the
2 other. I just -- I wanted to offer those comments because
3 that's how I viewed them, and I know that it was a sensitive
4 issue.
5 There are a number of factors that obviously favor
6 keeping the case in or moving the case to Colorado:
~ ,
'
The business is in Colorado. The business owns
8 golf courses and owns golf courses in Colorado.
9 Land is involved. Often courts, including me, have
10 made very sort of broad comments, probably too broad, about
11 the fact that, you know, cases that involve a single asset or
12 cases involving a piece of land should really be where -- in
13 a court where that piece of land is.
I think the more appropriate way to think about 1s:
What's the case going to be about? Are we reorganizing
l6 something that
1
S -- are we dealing very specifically with the
17 piece of property or the improvements on the property, or are
18 we talking about perhaps a bankruptcy for another reason?
19 Maybe it's litigation; tort litigation, whatever, that may be
20 pushing the reason why the case is filed.
All that said, there's no question that a c ~ s e like
22 this, which involves real estate, which involves the
23 improvements to real estate, which involves the tax base on
24 which the real estate is located, which affects the property
25 values of the surrounding homeowners, those are all factors
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page10 of
19
199
1 that would favor moving the case to Colorado. And they're
2 strong factors, and important.
3 'I'here are quite a number, also, howeve:r:
1
which are
4 either neutral or favor keeping it here. And if it's
5 neutral, it favors keeping it here because you haven't met
6 the burden on that point.
7 I think a liquidation, as I think of it, is
B unlikely in th1s case. We're either going to have a
9 reorganization of some or all of the or we're going
10 to have com:bination of sale of some or all of a:3seLs on a
11 going-concern basis.
12 An order 363 sale really ls not a liquidation in my
13 mi.nd. Whether it ultimately leads to a confirmed plan of
14 reorganization or not is anothe.r thing. But when people
15 think liquidation, when I think liquidation, I think fire
16 sale liquidation. I think putting the assets, not as the sum
17 of their parts, but part by part out for sale, and see
18 happens. It's like stripping down a factory or selling off -
19 - auctioning off leases, something like that, as more of a
20 liquidation.
21 I don't see this cases headed to liquidation. The
22 underlying improvements on the -- on the property are simply
23 too valuable to really be run as anything else. There are
24 property restrictions on whether they can be carved up and
25 turned into further homes. There's --obviously, it's in a
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page11 of
19
200
1 wealthy area. You know, the best use of these properties, at
2 least in my -- in my understanding -- and of course the
3 evidence ultimately might be wrong, but as I sit here, the
4 best use ot these properties is what they are; they're 901
5 courses. They're golf courses in a beautiful location, in a
6 high-income area, with surrounding homes. Sc; that's never
7 going to be, in my -- in my understanding -- and I think
8 that's a (indiscernible) understanding.
9 (Indiscernible) members, but the members are
10 scattered throughout the United States. Most people
11 obviously can't play golf in six feet of snow. If you can,
12 good luck. I don't know how you would do it. But somebody
13 will probably send me a YouTubc video in ten minutes showing
14 me somebody playing golf in six feet of snow.
15 But in any event, the seasonal nature, I think, 1s
16 really what's behind the fact that you have people who are
1'7 who summer there, who don't use the property twelve months
18 out of the year, who have primary residences elsewhere. So
19 at least as we sit as homeowners and members, you know,
20 that's really a neutral factor, but I'll discuss that a
21 little bit later, as well.
22 This case (indiscernible) this at the end, but a
23 big, large piece of it, or the primary piece right now at
24 least might be that it's a balance sheet -- a balance sheet
25 restructuring.
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page12 of
19
I
r--
201
1 More important, I think it's going to be not just
2 refinancing debt; I think you're going to need an infusion of
3 new capital into this company in order for it to survive; or
4 it's going to need to be sold off to parties who can put up
5 some capital, and get the thing moving again. So it's not
6 it's not, you know, a retooling a business, getting rid of
7 bad contracts, going back to our core values, and a lot of
8 things you see in more retail or manufacturing or that type
9 of case.
10 And quickly, I'll go through the factors that are
11 generally used. And again, these factors are not necessar ly
12 determinative. They are -- like any factor test, they are
13 meant to inform the Court's ultimate decision, I think. But
14 they're helpful to go through.
15 It's unclear to me -- it's a little unclear to me
16 which to use, the six- or the twelve-factor test. In any
17 event, I'll go through both, because I they'r appropr1ate.
18 So starting with the six-factor test.
19 The proximity of creditors of every kind to the
20 Court. That is a -- I think a close factor, but I think it
21 does slightly favor trans fer ring the case.
22 The proximity of the bankrupt debtor to the Court.
23 Obviously, that would favor moving it to Colorado.
24 The proximity of the witnesses necessary to the
2.:; administration of tlH0 estate. I think that's a neutral
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page13 of
19
202
1 factor, given that the witnesses that are going to be
neC(!Ssary to the administration of the estate are, in
3 the professionals, who will be the CRO, the restructuring
4 team, the CEO as well. But for the most part, I think the
S witnesses necessary to the administration of the estate is a
b neutral factor.
7 The location of the assets, obviously is in
8 Color. ado.
9 The economic administration of the estate. And you
10 know, I have to tell you, some of these factors are written
11 in such a way, I'm not sure what they mean. But I think
12 that's a neutral factor.
13 The necessity for -- for -- here we go.
14 The necessity for ancillary administration if the
15 liquidation should result. Well, that would favor Colorado.
16 So that score card is, you know, three, two, one,
17 if you go with the (indiscernible) in Colorado, which is
18 really three-three, which means it's a tie, which means the
19 debtor would -- would prevail under that factor test, at
20 least if it was used as a score card.
21 The twelve-factor test, which comes from the ,J1..unara
22 case in the Third Circuit.
23 Plaintiff's choice of forum; i.e., rnovants'. Wel.1,
24 that's clearly Colorado.
Defendant's forum preference; the debtor. Well,
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page14 of
19
203
1 that's Delaware.
2 Whether the claims arose elsewhere. That one is a
3 little tricky because it really gets down to what kind of
4 claims are we talking about. Somebody borrows money from a
5 bank, does it -- does the claim arise where the bank is, does
6 it arise where the actual property is that is the collateral,
7 et cetera. But the reality is the business is in Colorado.
8 The claims are sort of split, but they slightly favor
9 Colorado. So I think and I find that that factor favors
10 Colorado.
11 The location of the books and records and/or the
12 possibility of viewing the premises. And this is definitely
13 a Colot:ado issue. I mention this, and you knm.;, I trd.nk 1t 's
14 true, that the location of the books and records has really
15 become a non-factor. Ninety-nine percent of books and
16 records that are important are stored -- excuse me --
17 electronically, and there are virtual data rooms, et cetera.
18 You know, nobody opens a book anymore for that type of work.
19 However, the possibility of viewing the premises.
20 Again, we're talking about land, we're talking about a golf
21 course. In order to be able to make a decision whether you
2
')
L, want to buy this land or you want to invest in this land,
23 you're going to at least need a kick-the-tires view, in my
24 mind, of what you might be buying.
25 Number five, the convenience ot the as
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page15 of
19
204
1 indicated by the relative physical and financial
2 condition. I really find that to be a neutral party -- or
3 excuse me, a neutral factor for the most part, again, subject
4 to something I'm going to say in a little while.
5 The convenience of the witnesses, but only to the
6 extent that the witnesses may actually be unavailable for
7 trial. I think that's a neutral factor.
8 The enforc,;.:!ability of the judgment. That's a
9 neutral factor.
10 Practical considerations that would make trial
11 easy, expeditious, or inexpensive. Again, given all of tt1e
12 (indiscernible} located, given-- and I don't just mean tho
13 lawy(:n-sr but I mean, importantly, the CRO, the financial
14 advisors, I think that's a neutral factor.
15
16
1
,.,
"I
18
Relative administrative difficulty (indiscernible)
resulting from congestion of the Courts' dockets. 1 don't
know what the Court's docket is like in Colorado. My docket
is, frankly, not overly stretched at this point. I think
19 that's a neutral factor.
20 Public policies of (indiscernible}. That's
21 neutral.
22 (Indiscernible) applicable state law obviously
23 would favor Colorado.
24 And local interests in deciding local controversies
25 at home is a Colorado issue.
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page16 of
19
20S
1 So again, in that one, we get -- if you discount
2 the pro or the -- against the negative or neutral, it goes
3 five Colorado, seven for Delaware. And I'm missing one,
4 obviously, because that doesn't add up to twelve. Give me a
5 moment. One, two, three, four five ... I'm sorry. Five-
6 seven. It works out five-seven. Is that twelve?
7 UNIDENTIFIED: Yes.
8 THE COURT: Thank you.
9 (Lau<:Jhter.)
LO THE COURT: This is bankruptcy court. One plus one
11 doesn't equal tv-when:::, it never h,1s.
12 So again, you know, the factor is, in effect, a
13 tie, or slightly in favor of the debtor. So if you look at
14 those two lists, you know, you really would be in a position
15 to say this case should stay in Delaware. All right. But
16 it's not. I'm going to move it to Colorado, and this is why.
17 The key issue in this case, the key problem in this
18 case in my mind, based on the evidence and the arguments, is
19 where do you find members. That's where the money comes to
20 run the case. What do we do about getting members in the
'11
""*
22
23
door that are going to pay the dues to have the golf courses
be able to operate and to be profitable?
Well, this is where the litigation sort of touches
24 on it. Although the litigation, in and of itself, is not
25 necessarily a factor that favors moving it to Colorado, as
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page17 of
19
206
1 the debtor has argued, I think it's inexorably linked to the
2 membership problem.
3 The way I read it today is you have the issue that
4 there's obviously dissatisfaction and acrimony between
5 members and management, whether that's a minority or
6 majority. And the reality is, we sit here today, I think we
7 had a hundred -- we have a 163 paying members, according to
8 test1mony. That's not enough to support this business,
9 obviously.
10
1 1
.l. . .i ..
" ?
.t .: ...
13
Where is the debtor going tQ get members?' vvc?l1,
it's either going to members by reconciling with the
dissenting members or going out and opening up the bu:.d.ness
and g(;:tting members from other locations in the vicinity.
14 And that's a change. And I understand, as originally
15 planned, you had to be a property ovmer to be a member. l'ls
16 the debtor testified, there have been no new members in a
17 year. But of course, there's ongoing litigation. The golf
18 course is really operating on a shoestring budget at this
19 point.
20 But the up or down of this case is going to be the
21 members. And those are people who either reside in Colorado
22 or who have a vested interest in vacation in Colorado, who
23 are interested in the business in Colorado becausG of the way
24 it is r:un, where it is located, etcetera. That, to me, :i.:s
25 the central issue, a.nd that tips this case in favor 0f'
I
I
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page18 of
19
207
1 transferring venue.
2 Again, it's a -- it's a close issue. But I think
3 that primary problem and the fact that it's the primary
4 problem that has to be resolved for the company to reorganize
5 successfully is linked in such a way to the fact that theHe
6 courses are in Coloradoi the members at least spr;;mcl some of
7 their time of Colorado. You're going to be opening it up to
8 other members who rnay or m.::1y not -- or other
9 applicants who may or may not reside full time in the
10 jmmediate area
1
but at .least spend some time i.n the
11 area.
12 So that's a long way of saying that, based on the
13 evidence and the law and the arguments of counsel, the
14 movants have met their burden of transferring venue, and the
15 Court will enter an order immediately, transferrinq venue to
Colorado.
I've consulted with our Clerk's Office. As soon as
18 enter an order, which I'll do very shortly, our Clerk's
19 Office will contact the Clerk's Office in Colorado to
20 effectuate the transfer as quickly as possible. And they are
21 going to be made aware of the fact that there is a
(indiscernible) financing that will need to be dealt with
23 very, very quickly in Colorado, since obviously this Court
24 will not handle it here in Delaware.
Any
Case:12-24882-ABC Doc#:193-1 Filed:07/19/12 Entered:07/19/12 11:53:01 Page19 of
19
208
1 UNIDENTIFIED: Thank you, Your Honor.
2 THE COURT: No. All right .
.3 UNIDENTIFIED: No, Your Honor.
4 THE: COURT: P.ll right. Thank you very rntJch again.
5 I appreciate the presentation. And the Court will enter an
6 order shortlv.
7 COUNSEL: Thank you, Your Honor. Thank you, Your
8 Honor.
9 (Proceedings concluded at 5:14 p.m.)
10
11 CEHTIFICATE
12 [ certify that the foregoing is a correct transcript from the
13
electronic n:cording of the in the cibove-
14
entitled matter.
15
/s/Marv ZajaczkowO?.!:';i
J 6 Mary Zajaczkowski, Cr.!::'""'l'-'*-,.-.[-J--5-3-l
__ \LI.!J.y_ 1_.L 2 0 12
Date
17
18
19
20
21
22
23
24
') r
... ,)
CERTTFTCF\'I'ION
I certify that the foregoing is a correct
transcript from the electronic sound recording of the
proceedings in the above-entitled matter to the best of my
knowledge and ability.
Rand
AAE:R'l' Cert. No. 341; N.J. Cert. No. 242
Certified Court Transcriptionist for Reliable