Anna Stonehouse/The Aspen Times
Plagued by litigation, liens and millions of dollars in lingering debts, The Aspen Club & Spa declared Chapter 11 bankruptcy on Thursday in Denver.
The move will allow the company to sort out its debts through the bankruptcy court while remaining solvent, said Michael Fox, Aspen Club president.
“This is never a great thing, but it’s not a bad thing, either,” Fox said of the bankruptcy filing. “It’s actually a good thing for the project, The Aspen Club and the community, and it gives a clear path forward to get the project finished.”
The bankruptcy is the latest in a series of financial red flags for The Aspen Club & Spa, which embarked on a major redevelopment project at its 1450 Ute Ave. location in the spring of 2017.
Work on the project — including a remodel of the 40,000-square-foot Aspen Club & Spa building, the construction of a 54,000-square-foot lodge with 20 timeshares, and 12 multi-family affordable-housing units — came to a near halt in August 2017 when subcontractors abandoned the site because they were owed money for labor and materials.
“This is just the latest in an almost two-year saga of The Aspen Club not paying people who did substantial work to the benefit of its property,” said attorney Michael Sawyer of the Glenwood Springs firm Karp Neu Hanlon PC.
Sawyer represents multiple subcontractors that have filed mechanics’ liens against both The Aspen Club and the project’s general contractor, Denver-based PCL Construction Services. The subcontractors, as well as PCL, are involved in litigation with The Aspen Club in Pitkin County District Court, but that proceeding is now on hold because of the bankruptcy filing, Fox noted.
As he has stated previously, Fox said the creditors will eventually be paid.
“One of the nice things about bankruptcy is it provides a clear mechanism to get all of the parties at the table at once and to approve a plan and to move forward,” he said.
Fox also has maintained that a lender has been lined up to get the project up and running again, and added Thursday that the lender will provide interim funding as the bankruptcy proceedings move forward.
“The majority (of the construction project) will happen once the new plan for reorganization is approved,” he said.
The bankruptcy petition, which was filed by Denver law firm Markus Williams Young and Hunsicker LLC, reveals a significant gap between The Aspen Club & Spa’s assets and how much it owes.
With no more than $50,000 in assets, the company’s filing shows a litany of six-, seven- and eight-figure debts.
The largest one, $33.9 million, is owned to GPIF Aspen Club LLC, which acquired a $45 million loan note from the original lender, FirstBank, in December 2017.
GPIF Aspen Club’s address is in Greenwood Village according to the bankruptcy petition. GPIF took measures to foreclose on the club in March 2018, one month after Pitkin County District Judge Chris Seldin ruled a sale could occur because The Aspen Club was behind $10.7 million on the note.
GPIF, however, withdrew the foreclosure action March 6, with Fox saying at the time that The Aspen Club was on the brink of obtaining refinancing.
Other creditors include Aspen Club Redevelopment Fund LP of Glendale, which is owed $13.5 million; PCL Construction ($18.8 million); Revere High Yield Fund LP of Connecticut (with claims of $8.6 million and $2.3 million); and Ludvik Electric Co. of Denver ($2.7 million).
Among the local creditors are Myers & Co. Architectural Materials of Aspen ($1.5 million), Ashley Concrete of Glenwood Springs ($973,280) and Gould Construction of Glenwood ($1.7 million).
Because PCL was the general contractor on the project, it carried the responsibility to pay the subcontractors. However, because The Aspen Club did not pay PCL in full, the amounts owed to both PCL and the subcontractors are reflected in the bankruptcy petition. In other words, some of those debts are reflected at least twice in the petition.
“A lot of those numbers are double and triple,” Fox said. “PCL owes the subs and has a claim on behalf of everyone.”
Sawyer represents Gould Construction and other subcontractors. Because they already have filed mechanics’ liens against The Aspen Club, the subcontractors should be able to get priority status on being reimbursed because they already began their work, he said.
“The architects, engineers and surveyors started work on the project before any of the bank financing documents were put in place,” he said.
Sawyer said the bankruptcy filing had been expected for the past few months.
“A lot of local family businesses are owed a of money, and it’s hurting them,” he said. “This bankruptcy is more salt on the wounds for them not getting paid back.”
With more than 1,500 members at one time, The Aspen Club launched in the mid-1970s as a tennis and racquet club before transforming into the town hub for fitness and wellness.