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September 12, 2012

 

Greek Peak issued FDIC loan

Judge OKs nearly $2 million line of credit, calling it highly unusual

GreekBob Ellis/staff photographer
A federal bankruptcy judge in Syracuse on Tuesday OK’d a $1.8 million financial lifeline for Greek Peak from the Federal Deposit Insurance Corp. The Virgil resort is planning on opening for the ski season and digging its way out of a nearly $50 million debt load incurred in part by its recent Hope Lake Lodge expansion, pictured above.

By SARAH BULLOCK
Staff Reporter
sbullock@cortlandstandardnews.net

SYRACUSE — Federal Bankruptcy Court Judge Margaret Cangilos-Ruiz approved the release Tuesday of the balance of a $1.8 million line of credit to Greek Peak Mountain Resort from the Federal Deposit Insurance Corp.
The federal regulator took on the resort’s debt when the Tennessee bank that financed its recent expansion failed in January.
Cangilos-Ruiz noted that it was extremely unusual for the FDIC to act as a lender and pledge taxpayer money in a bankruptcy case.
“I don’t know that this will ever be repeated again,” she said.
Wendy A. Kinsella, a lawyer for the Virgil resort with the firm Harris Beach, told Cangilos-Ruiz at a hearing Tuesday in Syracuse that the company expects to be self-sustaining this winter.
“We’re going to go forward and open for the season,” said Al Kryger, president of Greek Peak. “We’re headed in the right direction.”
Greek Peak has also agreed to a bulk sale of unsold Hope Lake Lodge condo quarter-shares, Kinsella told the judge.
The company received $175,000 from the FDIC on Aug. 23 to help keep the resort afloat until bankruptcy proceedings were finalized.
Two earlier advances of FDIC funds total $800,000.
The $175,000 advance would be drawn down this week, Kinsella said.
Cangilos-Ruiz questioned how Peak Resorts came to face $47 million in debt.
Greek Peak was a victim of Tennessee Commerce Bank’s predatory lending practices, said Lee Woodard, another attorney from Harris Beach representing the resort.
“It is a great base business,” Woodard said.
If the condo quarter shares had sold and snow had fallen last winter, the bankruptcy might not have occurred, he said.
Greek Peak, which is best known for its ski resort, was severely affected by an unusually mild winter.
The company’s pre-bankruptcy assets were estimated between $5 million and $30 million.
After the Tennessee Commerce Bank failed in January, the FDIC supervised assets and deposits at the bank.
The FDIC also took control of approximately $30 million in loans to Greek Peak.
Greek Peak stopped paying on the loans in February, instead using the approximately $400,000 that serviced the debt to fund the resort.
Woodard stated that a search of his client’s assets by BDO Capital Advisors, an investment bank, before the bankruptcy filing turned up property gas rights as the sole untapped asset.

 

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