High-End Real Estate Woes
Utah’s Promontory Club in Bankruptcy
By Matthew Frank, 3-31-08
 |
|
 | |
|
Utah’s posh Promontory Club is in bankruptcy.
On Monday the three entities that make up the Promontory Club agreed to be debtors in Chapter 11 bankruptcy, three days after a number of the club’s creditors filed an “involuntary petition” to force them to.
Francis Najafi, CEO of Promontory developer Pivotal Group, said in a statement: “This decision...to file a bankruptcy action was in contravention of pleas for continued negotiation. However, now that we are in the involuntary bankruptcy venue against our wishes, we will make every effort to utilize the venue to achieve our goal of protection of the interests of (Promontory) members, employees and the community.”
Promontory, a 7,000-acre golf community near Park City, Utah, had been working to broker a sale to an investment group headed by primary creditor and Swiss bank Credit Suisse, but only an interim deal was struck and that deal was nixed by Friday’s involuntary petition filing by a group of smaller creditors that did not include Credit Suisse.
The club’s official team “remains optimistic that if the two groups of its lenders can come to terms among themselves, a negotiated settlement can still be finalized,” according to the release.
The club has cited deteriorating market conditions affected by the sub-prime mortgage crisis for its inability to make loan payments. In 2005 it borrowed $275 million from Credit Suisse. The bank has sued seeking receivership.
The Promontory Club is a project of the Pivotal Group of Phoenix, Arizona. The company Pivotal Promontory changed its name to Utah 7000 before the bankruptcy filings.
Najafi stated, “Pivotal Group is willing and able to commit funds to the project and will petition the court to be allowed to provide financing which will fund operational continuity and, if permitted by the court, ongoing construction of club facilities to protect the Promontory vision and brand.”
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. Home sales have been stagnant, and they run upwards of $5 million. According to court documents, 772 of 1,925 lots have been sold to date.
Like this story? Get more! Sign up for our free newsletters.
Comments
Be the first to comment on this article. Please complete the form below.