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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF COLORADO In re: CORDILLERA GOLF CLUB, LLC, Debtor. ) ) ) ) )

Case No. 12-24882-ABC Chapter 11

SUPPLEMENTAL OBJECTION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO DEBTOR'S MOTION FOR AN ORDER, PURSUANT TO SECTIONS 105 AND 363 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6003, AUTHORIZING AND APPROVING (I) THE DEBTOR'S DESIGNATION OF ALFRED H. SIEGEL AS CHIEF RESTRUCTURING OFFICER, AND (II) RETENTION AND EMPLOYMENT OF CROWE HORWATH, LLC, NUNC PRO TUNC TO THE PETITION DATE

The Official Committee of Unsecured Creditors (the "Committee") appointed in the above-captioned chapter 11 bankruptcy case (the "Bankruptcy Case") of Cordillera Golf Club, LLC (the "Debtor") hereby files its Supplemental Objection (this "Supplemental Objection") to the Debtor's Motion for an Order, Pursuant to Sections 105 and 363 of the Bankruptcy Code and Bankruptcy Rule 6003, Authorizing and Approving (i) the Debtor's Designation of Alfred H. Siegel as Chief Restructuring Officer, and (ii) Retention and Employment of Crowe Horwath, LLC, Nunc Pro Tunc to the Petition Date [Docket No. 8] (the "CRO Motion"), as Supplemented by the Debtor through its Supplement to the Motion, filed on July 24, 2012 [Docket No. 230] ("Supplement"), and in support respectfully represents as follows:

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I. BACKGROUND 1. On June 26, 2012 ("Petition Date"), the Debtor filed a voluntary petition for relief

under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"), thereby initiating the Bankruptcy Case. The Debtor remains in control of its business and affairs as a debtor-inpossession pursuant to sections 1107 and 1108 of the Bankruptcy Code. 2. On the Petition Date, the Debtor filed the CRO Motion. Through the CRO

Motion, the Debtor is seeking authority to (i) designate Alfred H Siegel as the Chief Restructuring Officer ("CRO") of the Debtor, and (ii) employ Mr. Siegel's firm, Crowe Horwath, LLC ("Crowe"), to provide restructuring management and advisory services to the Debtor in the Bankruptcy Case. 3. On July 6, 2012, the United States Trustee filed its Notice of Appointment of

Committee of Unsecured Creditors [Docket No. 86], thereby forming the Committee. 4. On July 16, 2012, the Committee filed its original Objection to the CRO Motion

[Docket No. 171] ("Original Objection"), on the bases that: (i) the Debtor structured its request in a manner that prevents Mr. Siegel from possessing or exercising any true independence as to any material decisions of the Debtor; and (ii) in light of his lack of independence over managerial decisions, and the numerous professionals already being utilized by the Debtor in the Bankruptcy Case, the Debtor's request to presently retain Mr. Siegel is not in the best interests of the Debtor's estate or its creditors. Original Objection, at 6-11. The Committee further objected that, contrary to the CRO Motion, if approved, Mr. Siegel and his firm should be required to submit to this Court's oversight and final approval pursuant to the requirements of

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Section 330 of the Bankruptcy Code, with respect to any compensation for his engagement. Original Objection, at 12. 5. As discussed hereinbelow, the Supplement does little, if anything, to allay the

Committees concerns and objections, but instead, substantially confirms their validity. Accordingly, the Committee hereby repeats and incorporates its Original Objection, by reference for all purposes as if fully set forth here. 6. Also on July 16, 2012, two additional objections were filed to the CRO Motion.

The first is asserted by the Cordillera Metropolitan District ("Special District"), and the Cordillera Property Owners Association, Inc. ("CPOA") [Docket No. 167] (the "Regulatory Objection"). The Special District and CPOA generally object that: (i) the relief requested in the CRO Motion unnecessarily proliferates the estate's professionals; (ii) the Debtor already has or has requested a number of additional outside advisors, and does not need a further advisor; and (iii) the CRO would effectively be powerless because of his subservience to the Debtor's ultimate principal, Mr. David Wilhelm. Regulatory Objection, at 1-8. 7. The second objection is jointly asserted by Cheryl M. Foley, Thomas Wilner, Jane

Wilner, Charles Jackson, Mary Jackson and Kevin B. Allen, Individually and as Representatives (collectively, the "Member Class Representatives") of a Certified Class of Members ("Member Class") [Docket No. 168] ("Member Class Objection"). The Member Class Objection details the extreme acrimony allegedly existing between the members of the Club and Mr. Wilhelm, who also acts as the manager of the Debtor's managing entity. Accordingly, the Member Class generally objects that in light of this acrimony, Mr. Siegel's lack of independence and

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subservience to the "direction" of Mr. Wilhelm negates any benefits that could otherwise be obtained through the CRO Motion. Member Class Objection, at 6-9. 8. Both the Regulatory Objection and Member Class Objection refer to certain

alleged misconduct and malfeasance by Mr. Wilhelm, related state court litigation proceedings involving same, and contend that such misconduct may or does justify the appointment of a truly independent trustee, which would render the CRO Motion redundant. Regulatory Objection, at 4, 10-12; Member Class Objection, at 6, 11-12. This alleged misconduct and malfeasance is further set out in the Member Class Representatives' Motion to Appoint a Chapter 11 Trustee, filed on July 24, 2012 [Docket No. 235]. 9. Recognizing the seriousness of the issues raised in the various objections and the

lack of independence originally proposed in the CRO Motion, On July 24, 2012, the Debtor filed its Supplement. In the Supplement, the Debtor characterizes the objections to the CRO Motion as based entirely on the issue that Mr. Siegel would allegedly need to "report" to Mr. Wilhelm, and makes a number of responsive arguments and supposed, supplemental concessions in further support of its request. See Supplement, at 9. Specifically, the Debtor responds that, inter alia: (i) Mr. Daniel Fitchett, the Debtor's CEO, operates the Debtor on a day to day basis and will continue to do so; (ii) Mr. Siegel does, and has, exerted independence from Mr. Wilhelm in making certain budgetary and operational decisions for the Debtor; (iii) having an experienced, independent chief restructuring officer such as Mr. Siegel to communicate with members and harmonize disparate views would be beneficial to the case; and (iv) Mr. Siegel already has substantial familiarity with the Debtor's business. Supplement, at 8, 10, 13. 10. As to its supplemental concessions, the Debtor proposes that:

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a.

the CRO, CEO and Wilhelm will each have a single vote as to any "strategic" decisions, with the CRO required to be within the majority for any such decision made on behalf of the Debtor to be valid. On this basis, the Debtor characterizes the CRO as having a veto over managerial decisions; the CEO shall continue to operate the Debtor on a day to day basis, with "input" from the CRO; compensation of the CRO and Crowe will be subject to section 330 of the Bankruptcy Code; and the CRO may retain independent counsel.

b. c. d. Supplement, at 12. 11.

Finally, to attempt to emphasize the CRO's alleged independence, the Supplement

represents that upon his appointment, the CRO shall have the express authority to, "in full cooperation and coordination with the Chief Executive Officer of the Debtor and its other officers, employees and agents": (1) perform reviews of the Debtor's finances and executory contracts, and identify cost reduction and operational improvement opportunities; (2) prepare and review possible reorganization plans and strategic alternatives, and perform such services as reasonably necessary to advance the Debtor's reorganization and a plan of reorganization; (3) serve as the primary contact with creditors and be authorized to communicate with parties in interest; (4) manage and direct professionals and "coordinate their individual efforts and work product" with the Debtor's stakeholders; and (5) develop a plan to implement the Debtor's plan of reorganization, revised business plan, and related forecasts and management presentations as may be required." Supplement, at Exh. B. 12. Although the Committee appreciates the Debtor's acknowledgement and

recognition that the CRO's employment should be expressly subject to Section 330 of the

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Bankruptcy Code, the remaining "supplements" and "clarifications" by the Debtor are ineffective and emphasize the need for an independent fiduciary for this estate. II. SUPPLEMENTAL OBJECTIONS A. The Debtor Proposes a Structure Promoting Managerial Deadlock That This Court Should Not Approve 13. Under the Debtor's proposed "decision tree" process, Mr. Siegel would have a

single, but blocking, vote with respect to managerial decisions, shared with Mr. Fitchett and Mr. Wilhelm. In effect then, Mr. Siegel, as CRO, could prevent any senior management action with which he disagreed, but he is also completely powerless to implement any such action that Mr. Fitchett and Mr. Wilhelm will not consent to. This "staring match" structure can do nothing to advance the Debtor's reorganization through an "independent" restructuring officer, and indeed, can result in a destructive, time consuming exercise in futility. 14. In fact, it creates a scenario that Bankruptcy Courts customarily take great pains In re Eurospark Industries, Inc., 424 B.R. 621, 632-33 (Bankr.

to avoid and ameliorate.

E.D.N.Y. 2010) (discussing management deadlock as independent, "no fault" basis for appointment of trustee); In re New Towne Development, LLC, 404 B.R. 140, 149 (Bankr. M.D. La. 2009) (same); In re New Orleans Paddlewheels, Inc., 350 B.R. 667, 681 (Bankr. E.D. La. 2006) (same); In re Petralex Stainless, Ltd., 78 B.R. 738, 744-45 (Bankr. E.D. Pa. 1987) (same). 15. As a result, the Debtor's proposed structure for meaningful strategic and

managerial decisions is ineffective to promote the advancement of the Debtor's chapter 11 case and bankruptcy duties by an independent fiduciary. In fact, its inability to respond to these concerns due to its apparent refusal to appropriately arm the proposed CRO with true

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independence and authority is a troubling signal of Mr. Wilhelm's refusal to cede any significant control over management of the Debtor. B. The CRO's Proposed Clarified, Enumerated Duties and Powers Establish That the CRO is Not Independent and Viewed as No More than a Service Provider to the Debtor's Management 16. The "clarifications" and specifically enumerated powers set forth in the

Supplement only magnify these concerns. The Debtor insists that the CEO, not Mr. Siegel, will continue to operate the Debtor.1 A review of Exhibit B to the Supplement establishes that Mr. Siegel, for his part, can do no more than conduct reviews, make recommendations, develop projections and plans to implement managerial decisions and restructuring decisions and plans made by or for the Debtor, provide services and direct professionals in implementing those decisions, and serve as the Debtor's spokesperson. Completely absent from these categories of authority is the authority to actually make any management decisions for the Debtor. Further, he is expressly required to fully "cooperate with" all managers, officers and agents of the Debtor. C. The Debtor's Stated Objectives Cannot be Accomplished Through This Supplemental Proposal 17. The Debtor's own justifications for the CRO Motion reveal that the Debtor needs

an independent spokesperson and buffer between management (i.e., Wilhelm) and the estate. The acrimony and litigation existing between the Debtor's management and the primary creditor constituency in this case highlights the need for an independent fiduciary. 18. The Committee agrees with the Debtor that an experienced, independent chief

restructuring officer that could harmonize disparate views within the estate and narrow the gap
1

While the Debtor insists that the CEO, and not Mr. Wilhelm, manages the Debtor's day to day affairs, there is no dispute that Mr. Wilhelm serves as the Manager for the Debtor's managing affiliate, CGH Manager, LLC. See Voluntary Petition [Docket No. 1], at p. 3.

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between the Debtor and its member creditors may be most beneficial to this case and estate, but proposing a CRO who lacks true independence, who must answer to Mr. Wilhelm and his subordinates, cannot accomplish these objectives. This effort only drives the wedge further between these constituents.2 D. Conclusion 19. For the foregoing reasons, the Committee respectfully requests that this Court

deny the CRO Motion, or approve it only subject to the resolution of the concerns and objections raised herein, and grant the Committee such other and further relief to which it may show itself to be justly entitled. Dated July 27, 2012 Respectfully submitted, s/Risa Lynn Wolf-Smith Risa Lynn Wolf-Smith, #15835 Clarissa M. Raney, #40374 HOLLAND & HART LLP 555 Seventeenth Street, Suite 3200 Denver, Colorado 80202 Telephone: 303-295-8000 Facsimile: 303-295-8261 rwolf@hollandhart.com cmraney@hollandhart.com ATTORNEY FOR OFFICIAL UNSECURED CREDITORS COMMITTEE -and-

The fact that Mr. Siegel may have managed to support an operational decision by Mr. Fitchett over Mr. Wilhelm's objection does little if anything to change this. If the Debtor's Supplement is candid, Mr. Fitchett (not Mr. Siegel) already had that authority, which apparently did not prevent Mr. Wilhelm from attempting to interfere with that decision-making. Moreover, confining Mr. Fitchett and Mr. Wilhelm to day to day operational services while leaving strategic management to Mr. Wilhelm is consistent with the fears and concerns espoused by multiple creditor groups.

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MUNSCH HARDT KOPF & HARR, P.C. Russell L. Munsch Texas Bar No. 14671500 Joseph J. Wielebinski Texas Bar No. 21432400 Jay H. Ong Texas Bar No. 24028756 Zachery Z. Annable Texas Bar No. 24053075 Pro Hac Vice Motions Pending 3800 Lincoln Plaza 500 N. Akard Street Dallas, Texas 75201-6659 Telephone (214) 855-7500 Facsimile (214) 978-4335 ATTORNEYS FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS

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CERTIFICATE OF SERVICE The undersigned hereby certifies that, on July 27, 2012, in addition to service via the Court's CM/ECF system, she personally caused to be served a true and correct copy of this filed document, to be served, via First Class U.S. Mail, postage prepaid and properly addressed, on the parties shown on the attached service list.

Arthur J. Abramowitz, Esq. Cozen O'Connor, PC LibertyView, Suite 300 457 Haddonfield Road Cherry Hill, NJ 08002 Garry R. Appel, Esq. Appel & Lucas, P.C. 1660 17th Street, Suite 200 Denver, CO 80202 William P. Bowden, Esq. Ashby & Geddes, P .A. 500 Delaware avenue, 8th Floor P.O. Box 1150 Wilmington, DE 19899 Brad W. Breslau, Esq. Cozen O'Connor, PC 707 17th Street, Suite 3100 Denver, CO 80202

Zachery Z. Annable, Esq. Munsch Hardt Kopf & Harr, P.C. 3800 Lincoln Plaza 500 N. Akard Street Dallas, Texas 75201-6659 Joseph M. Barry, Esq. Young Conaway Stargatt & Taylor LLP Rodney Square 1000 North King Street Wilmington, DE 19801 Donald J. Bowman, Esq. Young Conaway Stargatt & Taylor LLP Rodney Square 1000 North King Street Wilmington, DE 19801 Mikel Bistrow, Esq. Foley Lardner LLP 402 W. Broadway, Suite 2100 San Diego, CA 92101

Travis G. Buchanan, Esq. Young Conaway Stargatt & Taylor, LLP 1000 N. King St. Wilmington, DE 19801

Peter A. Cal, Esq. Sherman & Howard L.L.C. 633 17th Street, Suite 3000 Denver, CO 80202

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Kathryn M.S. Catherwood, Esq. Foley & Lardner LLP 402 W. Broadway, Ste. 2100 San Diego, CA 92101-3542

Christopher Celentino, Esq. Foley Lardner LLP 402 W. Broadway, Suite 2100 San Diego, CA 92101 Service Via e-mail and ECF Tobey M. Daluz, Esq. Ballard Spahr LLP 919 N. Market Street, 11th Floor Wilmington, DE 19801

Shaun A. Christensen, Esq. Appel & Lucas, P.C. 1660 17th Street, Suite 200 Denver, CO 80202

Carl A. Eklund, Esq. Ballard Spahr, LLP 1225 17th Street, Suite 2300 Denver, CO 80202

Mark L. Fulford, Esq. Sherman & Howard L.L.C. 633 17th Street, Suite 3000 Denver, CO 80202

James J. Holman, Esq. Duane Morris LLP 30 South 17th Street Philadelphia, PA 19103

Ericka F. Johnson, Esq. Womble Carlyle Sandridge & Rice, LLP 222 Delaware Avenue, Suite 1501 Wilmington, DE 19801 Benjamin W. Keenan, Esq. Ashby & Geddes, P.A. 500 Delaware Avenue P.O. Box 1150 Wilmington DE 19899 David L. Lenyo, Esq. Garfield & Hecht, P.C. 601 E. Hyman Ave. Aspen, CO 81611

Kristi A. Katsma, Esq. Dickinson Wright PLLC 500 Woodward Avenue, Suite 4000 Detroit, MI 48226

Michael S. Kogan, Esq. Kogan Law Firm, APC 1901 Avenue of the Stars, Suite 1050 Los Angeles, CA 90067

Vincent J. Marriott, III, Esq. Ballard Spahr, LLP 1735 Market Street, 51st Floor Philadelphia, PA 19103

Melissa Maxman, Esq. Cozen O'Connor, PC 1627 I Street, NW, Suite 1100 Washington, DC 20006

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Dawn Messick, Esq. Foley & Lardner LLP 402 W. Broadway, Suite 2100 San Diego, CA 92101

Mark Minuti, Esq. Saul Ewing LLP 222 Delaware Ave., Ste. 1200 Wilmington, DE 19899

Erika L. Morabito, Esq. Foley Lardner LLP 3000 K Street, N.W., Suite 600 Washington, DC 20007 Russell L. Munsch, Esq. Munsch Hardt Kopf & Harr, P.C. 3800 Lincoln Plaza 500 N. Akard Street Dallas, Texas 75201-6659 Jay H. Ong, Esq. Munsch Hardt Kopf & Harr, P.C. 600 Congress Ave., Ste. 2900 Austin, Texas 78701-3057

Paul Moss, Esq. Office of U.S. Trustee 999-18th Street, Ste. 1551 Denver, CO 80202

Brittany J. Nelson, Esq. Foley Lardner LLP 3000 K Street, N.W., Suite 600 Washington, DC 20007 Ricardo Palacio, Esq. Ashby & Geddes, P .A. 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, DE 19899 Richard W. Riley, Esq. Duane Morris LLP 222 Delaware Avenue, Suite 1600 Wilmington, DE 19801-1659

Jon T. Pearson, Esq. Ballard Spahr 100 North City Parkway, Suite 1750 Las Vegas, NV 89106-4617

Matthew J. Riopelle Foley & Lardner LLP 402 W. Broadway, Ste. 2100 San Diego, CA 92101-3542

Harlan W. Robins, Esq. Dickinson Wright PLLC 15 N. 4th Street Columbus, OH 43215 Harvey Sender, Esq. Sender & Wasserman, P.C. 1660 Lincoln St., Ste. 2200 Denver, CO 80264 Service Via e-mail and ECF

Sara Schindler-Williams, Esq. Ballard Spahr, LLP 1735 Market Street, 51st Floor Philadelphia, PA 19103

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Zachary I. Shapiro, Esq. Richards, Layton & Finger, P.A. One Rodney Square 920 N. King Street Wilmington, DE 19801 Ann Marie Uetz, Esq. Foley & Lardner LLP One Detroit Center 500 Woodward Avenue, Suite 2700 Detroit, Michigan 48226-3489 Matthew P. Ward, Esq. Womble Carlyle Sandridge & Rice, LLP 222 Delaware Avenue, Suite 1501 Wilmington, DE 19801

Darnien Tancredi, Esq. Cozen O'Connor, PC 1201 N. Market Street, Suite 1400 Wilmington, DE 19801

David V. Wadsworth, Esq. Sender & Wasserman, P.C. 1660 Lincoln Street, Suite 2200 Denver, CO 80264 Gregory W. Werkheiser, Esq. Morris, Nichols, Arsht & Tunnell LLP 1201 N. Market St., 18th Floor P.O. Box 1347 Wilmington, DE 19899-1347 Joseph J. Welebinski, Esq. Munsch Hardt Kopf & Harr, P.C. 3800 Lincoln Plaza 500 N. Akard Street Dallas, Texas 75201-6659 Dan White Cordillera Golf Club, LLC 97 Main Street, Suite E202 Edwards, CO 81632

Ronald Wick, Esq. Cozen O'Connor, PC 1627 I Street, NW, Suite 1100 Washington, DC 20006

Joshua E. Zugerman, Esq. Ballard Spahr LLP 919 N. Market Street, 11th Floor Wilmington, DE 19801

Centralized Insolvency Section 2970 Market Street Philadelphia, PA 19104

Colorado Department of Revenue Attn: Bankruptcy Unit 1375 Sherman Street, Room 1375 Denver, CO 80261

Internal Revenue Service Centralized Insolvency Section P.O. Box 7346 Philadelphia, PA 19101-7346

Internal Revenue Service Department of Treasury Ogden, UT 84201-0030 Internal Revenue Service

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George S. Canellos, Regional Director Securities & Exchange Commission New York Office 3 World Financial Center, Suite 400 New York, NY 10281-1022 Secretary of State Division of Corporations Franchise Tax John G. Townsend Building 401 Federal Street- Suite 4 P.O. Box 898 Dover, DE 19903

Securities & Exchange Commission Central Regional Office Attn: Office of General Counsel (Bankruptcy) 1801 California Street, Suite 1500 Denver, CO 80202 Secretary of Treasury 820 Silver Lake Boulevard, Suite 100 P.O. Box 7040 Dover, DE 19903

July 27, 2012 s/Lela Lopez Velasquez Lela Lopez Velasquez

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