The private company EB5AN, which helps administer a federal immigrant investor program, is looking to secure its stake in a beleaguered Summit County golf resort.
In a court filing Dec. 12 it asked a federal bankruptcy judge to declare once and for all that EB5 and its clients are first in line to be paid by Wohali in Coalville.
It comes as Park City businessman Doug Bergeron is offering to loan the resort money to help it restructure, potentially moving himself to the front of the line.
He bought about $3,000 of Wohali’s debt to gain standing in its bankruptcy proceedings after announcing his intention to buy and continue developing the resort last year.
EB5 has so far offered the best loan terms, according to the court-appointed trustee. The trustee is guiding Wohali through bankruptcy for its owners, some of whom are suing one another.
But Bergeron’s attorneys, including from the New York firm Sullivan & Cromwell, and lawyers for people who bought home lots in Wohali have criticized EB5 in court.
They characterized the investors EB5AN represents as lending to Wohali primarily for green cards without needing or expecting repayment.
The EB-5 Immigrant Investor Program is intended to help U.S. projects get affordable financing by offering permanent residency status to foreign investors. Wohali secured an almost $80 million loan through the program; EB5 says it’s owed that and millions more in interest.
The investors’ identities aren't known, since the federal program is confidential.
But EB5AN manager Mike Schoenfeld told KPCW that investors in the program are usually families from countries with large populations that might have an annual limit or quota for visas.
He said sometimes investors are already in the US or have children at American universities and are looking for a way to stay long-term.
The program requires each immigrant investor to spend at least $800,000 and create 10 project-related jobs. Schoenfeld says that’s a large amount of money for most, and they would be eager to have it back.
EB5AN published a blog post near the end of last year explaining to its investors the paths to getting their money back.
The blog also provides an explanation for why Wohali ran out of money in the first place.
“Many business challenges can affect a project like this, but EB5AN believes the specific issues for Wohali came from slow sales and the developer’s choice to prioritize spending primarily on infrastructure and amenities,” it states.
According to the blog, Wohali’s 18-hole golf course is complete and an executive course and some townhomes are partially built. It’s allowed to build more than 400 housing units of various kinds.
Development paused once the resort filed for Chapter 11 bankruptcy protections in August. The blog states that was likely in response to EB5’s attempt to foreclose on Wohali.
All the parties are due back in bankruptcy court later this month to see who will get to loan Wohali the money it needs to restructure. The subsequent court ruling may affect who’s in the best position to get paid or foreclose on the property.
According to court testimony, Wohali is likely to get auctioned off in the spring.
