credit suisse sues
Utah’s Posh Promontory Development Could Be Close to Bankruptcy
By Matthew Frank, 3-20-08
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Promontory, the gated golf community near Park City, Utah, may soon file for bankruptcy if it can’t broker a deal to sell to its primary lender Credit Suisse or find additional financing.
The development, owned by Pivotal Group out of Phoenix, is suffering from stagnant home sales (they run upwards of $5 million) and announced in a January press release (scroll down) that it had reached an agreement in principle on the sale of the Promontory operating and development companies to Credit Suisse.
But a deal was never finalized, and Credit Suisse has sued Promontory claiming the club has not fulfilled obligations to the lender, according to a Tuesday story in the Park Record.
According to the story, a judge in Summit County denied a request from Credit Suisse to appoint a receiver to run Promontory until a legal skirmish between the lender and developer is resolved.
In the next few weeks, if “Promontory is not able to secure some additional funding it will likely seek relief through a bankruptcy filing,” the judge acknowledged in his decision.
The club’s troubles are another indication that luxury developments in the West are vulnerable to the problems afflicting real estate and financial markets across the country. Promontory Managing Director Rich Sonntag told the Park Record that he estimates $700 million worth of sales have yet to occur.
Promontory, three miles east of Park City, dubs itself “a family-friendly, luxury second-home community in the heart of Utah’s Rocky Mountains, where legendary skiing meets world-class golf.” The development plan includes about 2,000 homes on 7,000 acres and boasts a Jack Nicklaus Signature Design golf course.
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