Creditors Push Promontory Toward Bankruptcy

By Matthew Frank, 3-28-08

Creditors for the Promontory Club near Park City, Utah, are trying to force the upscale, gated golf community into bankruptcy.

An “involuntary petition” was filed in bankruptcy court Friday, about two weeks after a Utah judge said the club would likely seek bankruptcy protection if it couldn’t find funding to solve its financial woes.

The club, suffering from stagnant home sales, owes international banker Credit Suisse about $280 million, but it was a handful of other banks with smaller claims that filed the paperwork Friday. (Fully secured creditors cannot file involuntary petitions.)

A minimum of three creditors, owed at least $13,475 apiece, must enjoin for an involuntary bankruptcy petition, and that’s what these Promontory creditors did. It’s unclear at this time how much is owed beyond that.

Attorney Kenneth Cannon of Salt Lake City, the creditors’ local representation, said it’s a complicated case, and “in certain respects it’s not a full-blown bankruptcy case.”

The Promontory Club is a project of the Pivotal Group of Phoenix, Arizona, which recently changed its name to Utah 7000.

The next big step, according to Cannon, is to determine if the Utah 7000 will agree to become a debtor in a bankruptcy case.

Promontory filing for bankruptcy protection appeared to be imminent after it and Credit Suisse didn’t come to terms on the sale of Promontory’s operating and development companies to the bank. Credit Suisse then sued Promontory claiming the club had not fulfilled obligations to the lender, according to a story that ran in the Park Record.

Calls to Pivotal Group/Utah 7000 were not immediately returned late Friday.

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.