On a conference call with creditors Sept. 11, one of Wohali’s managing and founding partners John Kaiser said the resort needs $6 million while it navigates bankruptcy.
That’s to pay for golf course operations, install water and electrical lines at the resort and fulfill outstanding obligations to the city of Coalville.
Wohali has to finish a new sewer pump station for the city on the west side of Interstate 80. Coalville Mayor Mark Marsh said it’s in the resort's own interest to finish the sewer infrastructure project.
“It'll be pretty important for them to do it, because if we can't handle their sewage, they can't build anything,” the mayor said at the Sept. 8 Coalville City Council meeting.
Kaiser proposes financing the operational costs with debtor-in-possession (DIP) financing, or a special type of loan that would allow Wohali to borrow the money it needs to restructure.
A DIP loan would have to be approved by a bankruptcy judge, and Wohali attorney Mark Rose said he’ll make the application in a matter of days.
Wohali filed for Chapter 11 bankruptcy Aug. 8, amid allegations it had defaulted on loans, owed money to contractors and laid off all employees except those running its golf course.
According to Coalville’s interim city attorney Craig Smith, there are currently about 40 employees still on the payroll.
In a court hearing Sept. 2, Rose said the resort didn’t pay employees in June or August. People who had purchased lots in Wohali have since stepped in to fund payroll.
Chapter 11 protections allow businesses to continue operating while they restructure their finances and make their lenders whole.
However, attorney Michael Johnson, who represents Wohali’s primary creditors — who say they’re owed more than $85 million — has said he’s “not sure that this is a reorganization.”
He has predicted the resort and golf course is headed for auction at what’s called a Section 363 sale.
Smith said Wohali isn’t “anywhere close” to being sold yet and doesn’t expect the bankruptcy to move quickly due to its financial complexity.
“Over time, they'll either have a plan of reorganization approved, or it will be converted to a Chapter 7 [bankruptcy], which means liquidation of all of the assets,” the interim attorney told Coalville councilmembers Sept. 8.
A local billionaire has already announced his interest in the resort if it’s liquidated or sold. Doug Bergeron, who developed the Deer Valley mansion featured in the “Mountainhead” film, wants to take over the golf course and build a hotel there.
The primary lenders, meanwhile, want the process to move more quickly. They’ve asked bankruptcy court to treat Wohali as a single asset real estate debtor, which may allow them to foreclose more easily.
Smith believes Wohali will likely oppose the motion. Its deadline to object is Sept. 15.
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