The bankrupt Promontory Club outside Park City, Utah will be sold at auction on April 15 after banker Credit Suisse was unable to raise $70 million in new financing for the luxury golf and ski community.
A Chapter 11 bankruptcy reorganization plan approved earlier this month called for a loan syndicate led by Credit Suisse to take over ownership of the club and raise $70 million in so-called exit financing to fund the operations until the real estate market turned and lots sales resumed. If the money could not be raised, the club would be sold at auction.
The Credit Suisse group lent $350 million to the club in 2005, and most of that money was taken as “return on capital” by the original developer, Arizona-based Pivotal Group and an Arizona employee pension fund. Like several other high-end Western resorts, Promontory last year found itself with a lot of debt and little revenue as the economic meltdown brought sales to a halt.
Bidders for the club will have to take over the membership agreements and show they have the capital to carry it through the downturn. Credit Suisse, or even Pivotal, could emerge as bidders in the auction.