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5 Years : From Dec 2010 to Dec 2015
By Joseph Checkler
NEW YORK -- A judge on Tuesday said a group of luxury U.S. resorts could tap half of a $10 million loan from Five Mile Capital Partners that will carry the resort group through a Dec. 6 auction of its properties.
Judge Sean H. Lane of the U.S. Bankruptcy Court in Manhattan approved the additional funding from Five Mile despite concerns raised by the resorts' creditors in court about whether the company will be able to pay back the loan and the claims that it is supposed to pay. The lawyer for the company's official committee of unsecured creditors said his objection was more for later, when the resorts plan to come back to court to ask for another $5 million.
The additional $5 million approved Tuesday is on top of an existing $80 million bankruptcy loan for the resorts made by Five Mile and Paulson & Co. Paulson, the hedge fund firm run by John Paulson, owns a controlling stake in the resort group, officially called MSR Resort Golf Course LLC. If Judge Lane approves the additional $5 million at a hearing in December, that would bring the total amount borrowed to $90 million. The approval also pushed back the maturity date of the loan to Jan. 31, 2013, from Dec. 31, 2012.
MSR's laborious bankruptcy is nearing its climactic moment, the Dec. 6 auction of four iconic properties: Maui's Grand Wailea Resort Hotel & Spa, the La Quinta Resort & Club in La Quinta, Calif.; the Arizona Biltmore in Phoenix; and the Claremont in Berkeley, Calif.
The deal also includes the Great White Course, a Greg Norman-designed golf course adjacent to the Doral Golf Resort & Spa in Miami. A company controlled by Donald Trump in June bought the Doral from Paulson for $150 million.
GIC RE, the real-estate arm of Singapore's sovereign wealth fund, will kick off the bidding for the remaining resorts with its $1.5 billion offer.
The resorts' trip through bankruptcy began more than a year and a half ago, when Paulson teamed with Michael Ashner's Winthrop Realty Trust (FUR) to seize the properties through a foreclosure proceeding. Days later, the group put the resorts into Chapter 11 to avoid paying more than $1.5 billion in senior debt.
Since the filing, the company has made several structural changes, reshaping contracts with property managers Hilton Worldwide and Marriott International Inc. (MAR) and preparing its resorts for sale so it can repay creditors.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)
Write to Joseph Checkler at email@example.com. Follow him on Twitter at @JoeCheckler
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