Celebrity Resort Files for Chapter 11 Bankruptcy Protection

[Doug]

Celebrity Resort Files for Chapter 11 Bankruptcy Protection
March 09, 2010

Celebrity Resorts LLC and its affiliates have filed for Chapter 11 bankruptcy protection, listing tens of millions in estimated liabilities.

The Orlando-based time-share company listed just two unsecured creditors, International Escrow Services of Atlanta and Resort Condominiums International of Carmel, Ind. But about three dozen other filings, including Celebrity Resorts of Orlando LLC and Celebrity Resorts of Lake Buena Vista LLC, listed pages of additional creditors.

In the bankruptcy filings, the company's chief executive officer, Jared Myers, said he is owed $680,812 in unpaid compensation. A lawyer for the company could not be immediately reached for comment.

Celebrity Resorts began showing signs of distress as early as July 2008, when it announced it was cutting an unspecified number of jobs and eliminating an area of its marketing business that was unprofitable.

According to the time-share company's Web site, Celebrity Resorts has properties in 13 locations across the U.S. The company was formerly known as Resort World, a family-owned business that started selling time shares in the Caribbean in the 1970s and then in the Orlando area in the 1980s.

In August 2008, Celebrity purchased Quintus' interest at Hanalei Bay Resort in Kauai. Condo and timeshare owners at Hanalei Bay Resort soon became unhappy with Celebrity's management and began trying to oust them. Owners were sucussful in removing Celebrity as manager late last year by buying out their contract. Terms of that contract are undisclosed.

Celebrity still owns the restaurant and lounge at Hanalei Bay Resort.

[Doug]

On Friday, Celebrity Resorts, LLC and 35 affiliates voluntarily filed for chapter 11 bankruptcy protection in the United States Bankruptcy Court in Orlando, Florida. Celebrity Resorts was founded in 2003 and the group of debtors own and operate 13 vacation timeshare resorts in Colorado, Florida, Hawaii, New Jersey, Nevada, and Pennsylvania. The map below shows the locations of the companies' resorts.






In their bankruptcy pleadings, the companies claim that they have been "one of the fastest growing timeshare companies in the nation" since their founding. The companies blamed their bankruptcies on three primary factors:

General economic factors, which resulted in an "unprecedented decrease in revenues" for the timeshare industry beginning in September 2008.
Disagreements between members of the Meyers family who control the debtors regarding the companies' business model, which resulted in the termination of two family members - Neil Meyers (the father) and Steve Meyers (a son and the debtors' general counsel) and a lawsuit by Neil Meyers against several of the companies. A second son, Jared Meyers, remains as the chief executive officer of all of the debtors.
The declaration of a default on a loan owing to Textron Financial Corporation.
The companies also reported that they collectively have approximately $12 million in unsecured debt and the following secured debt:

Textron Financial - $10.9 million
Farmington Bank - $5.5 million
RBC Bank (USA) - $1.5 million
Resort Funding, LLC - $1.7 million
Fifth Third Bank - $2.9 million
Jared & Kristi Meyers - $390,000
The companies are represented by Latham, Shuker, Eden & Beaudine, LLP.

[Doug]

PDF file of Bankruptcy is attached.

[jebett3@aol.com]

Will be interesting!

[Doug]

AOAO OWNER UPDATE:

As some of you already know, Celebrity Resorts filed for Chapter 11 bankruptcy on Friday, March 5th. The Bankruptcy hearing is scheduled for April 5, 2010 in Orlando, FL Note the document source below. HBR is listed as one of their resorts in the filing.

(link to document in post #3 above)


Dick Schwieckert, President of the VOA and I have each had conversations with our legal counsel regarding the implications to our respective owners regarding the Celebrity bankruptcy filing in Florida. Our counsel recommends that we engage an attorney specializing in bankruptcy who is licensed in Florida to monitor the proceedings and look out for our interests. He is assisting us in identifying the attorney. We have identified six attorneys in FL from referrals and they are being contacted to discuss our needs. Our legal counsel does not think our settlement agreement is in jeopardy.

We have ordered a title search on Unit 16A (the restaurants) so we will have the full picture regarding any liens and encumbrances on that unit. We have not filed a notice of lien against the unit for the unpaid maintenance fees and rent on the timeshare sales office but the AOAO has an automatic statutory lien without any filing; the main purpose for filing is to make sure there is priority over subsequent mortgagees (which is most likely not an issue here), existing mortgagee already have statutory priority over the AOAO.

I think we are fortunate to be where we are with the settlement because we have taken control of the resort. For the first time in history the management contract is under the control of the respective boards (owners, not management company people). There are some blogs questioning the settlement and whether we should have waited until this bankruptcy filing. Had we not settled, the resort would have been shut down in October because the VOA was out of money. Celebrity would no longer loan them operating money. The AOAO dues alone would not pay for all of the payroll, insurance and utilities. At the time of settlement, there was no indication Celebrity would be filing bankruptcy.







At this point we do not know what impact the bankruptcy filing will have on the sale of the restaurants. We do know there are at least a half dozen parties interested in possibly purchasing the restaurants but have no knowledge of the status of these inquiries.

We are counting down our days before we return to Colorado after being here over three months. I sincerely wish all of you could experience the progress at the resort, the attitudes and enthusiasm of the employees as well as the satisfaction of timeshare and full time owners who have been here. The timeshare owner meetings have been a pleasure to attend in contrast to the frustration shown by timeshare owners last year.


Kent Oehm
AOAO Board President

Thanks for the update Kent

[jebett3@aol.com]

http://www.nevadaappeal.com/article/...ntprofile=1058
In the wake of Florida-based Celebrity Resorts filing for Chapter 11 bankruptcy, David Walley's Hot Springs Resort and Spa's 6,600 time-share owners are wondering how the news will affect their investment.

“Right now, if you have reservations or exchanges, they'll be honored,” said Gary Grottke, treasurer of the Walley's Property Owners Association. “If you haven't made reservations, Celebrity isn't taking reservations now, but owners can mail reservation requests directly to the association using our P.O. Box in Genoa.”

Grottke said for more information, owners should visit www.dwrinfo.com.

In light of the bankruptcy, though, there still exists concerns how the Genoa resort's daily operations will change.

Grottke said the restaurant, DW's Dinner House, will close today, but that the time-share and spa portions of the resort will stay open.

On Thursday, Grottke and lawyer Joan Wright, representing the association board, were in Douglas County District Judge Michael Gibbon's courtroom for a hearing on a receivership order.

The plaintiffs had filed suit to move the association's assets from Celebrity Resorts to Quintus Resorts, the prior owner of Walley's. Grottke, president of Quintus, said his company still owns a little more than 500 time-share weeks.

Celebrity's bankruptcy, however, resulted in an automatic stay of the receivership order.

Wright said the association's suit doesn't aim to take property away from Celebrity, but only remove the association's own property from their management.

Gibbons ruled the bankruptcy stay in effect until otherwise lifted, but allowed an element of the lawsuit, which names two individuals, to proceed.

Grottke said the association is looking for a new management company for the time-shares, although they can't hire a new firm until the old contract is terminated and the action approved by the bankruptcy court.

“The overwhelming sentiment is that the owners have lost trust in Celebrity and feel that they need a new manager,” Grottke said. “We got a problem, but we have a lot of committed people who are now working together. The owners will prevail.”

Wright said Jared Meyers, Celebrity CEO, and Craig Lewis, both Celebrity-appointed members of the association board until voted off less than two weeks ago, have not filed for personal bankruptcy and therefore are not protected by the Chapter 11 filing.

“I expect they'll be served in the next 72 hours,” Wright said.

“No one has said anything from the defense,” Gibbons said, noting the empty defense table.

Looking out at more than a dozen time-share owners in the courtroom, Gibbons said, “You probably wish the trial was right now.”

Grottke said the association board is suing Meyers and Lewis for “breach of fiduciary duties.”

“We want to try to recover some of the missing funds,” he said. “There's about $1.5 million in question.”