The bankruptcy of Premier Resorts of Utah (PRU) is likely to wrap up this year, but there probably won’t be much money left for general creditors.
That’s according to Danny Kelly, an attorney for the trustee, Steven Bailey.
The company, a subsidiary of Premier Resorts International (PRI) and known locally as Deer Valley Lodging, went into bankruptcy in May of 2009. Because the business was primarily a rental and property manager, its assets included items like old computers, equipment, and bed sheets.
In court filings, PRU estimated that debts to tax authorities, former employees, vendors and condominium owners who never received their share of winter revenue, totaled around $13 million, while its assets were worth around $725,000 and included money owed but never paid to the company. An auction of items like vehicles and washing machines brought in $220,000. The trustee obtained a judgment of nearly $21 million, and has recovered some, but nowhere near the full amount, he said.
The trustee is coming to the conclusion that the money PRU and PRI sent outside of Utah mainly to a resort in South Carolina was sent incrementally over a long period of time. The money was used to fund operations and losses there rather than purchase hard assets that would be easy to retrieve or liquidate.
“We have encountered banks and receivers (in South Carolina) who have millions of dollars of liens on the properties for loans the banks made to buy and develop the properties. The value of the assets plummeted and there may not be much we can obtain from those operations at this point,” Kelly said.
Former PRI co-owner Brad Goulding has been “tight-lipped,” Kelly said. Barring new information, the trustee now has a cost-benefit concern with continuing his investigation, he said.
The trustee has conducted an extensive investigation and is still looking for sources of recovery, but think they have nearly exhausted the leads, he said.
“But we would always welcome new leads,” he added.
With tax entities and employees standing at the head of the collection line, there probably won’t be much left for everyone else, he said.
“Absent a breakthrough, we’re not optimistic that general unsecured creditors, or non-priority creditors, will get much, if anything,” he said.
If large amounts of money did not go out of Utah to projects in South Carolina, then where did the money go? Kelly said the answer isn’t clear. But based on the trustee’s investigation and the testimony of numerous witnesses, it appears that financial troubles had been building for some time.
“They thought the problems would go away or they’d somehow be able to catch up but this did not turn out to be the case. They were not able to catch up,” he said. “It looks like they thought things would turn around; that they could pull out of it that there was some light at the end of the tunnel.”
The company knew it needed to make more money, and was looking for investors, but the opportunities didn’t present themselves, he added.
To the credit of the company, he added, it did strive to pay wages. Most of the current employee claims against the company are for benefits owed. That is somewhat unique for companies in bankruptcy, he said.
Kelly said he understands a lot of people are upset, but Utah law permits the practices used by PRU. Most owners expected that Utah’s laws would be like the laws of other states that require a company to hold rents in a trust account. Utah has not passed such laws. The company’s agreements with owners did not restrict what PRU could do with the money, he said.
“The funds received by PRU could be spent by PRU like any other money it received. I want to emphasize this, because it has been the source of so much anger and frustration from the owners,” he said.
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