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Trustee for Deer Valley Lodging/Premier Resorts of Utah Bankruptcy
 Tracing Missing $10 million of Condo Owners Share of Rental Profits


Sep. 16, 2009--Steve Bailey of Ogden, the U.S. Trustee appointed to the Deer Valley Lodging/Premier Resorts of Utah (PRU) bankruptcy case, believes he's identified the missing money and on Monday took action to hunt down where it went.

Last March, Park City condominium owners were notified by Premier Resorts of Utah, for which Deer Valley Lodging was a "doing business as" name, that their share of rental profits from the winter were not available. After a few months of waiting, some of the owners made a move to force PRU into bankruptcy, which it eventually accepted.

During hearings with the trustee, PRU's director Bradley Goulding admitted that all monies from PRU went into a sweep account controlled by the parent company, Premier Resorts International (PRI). Every affiliate, which includes businesses in South Carolina, Oregon and Hawaii, paid into the account, and every expense was paid out of it.

In an interview Friday, Bailey said that his team has traced $10 million above PRU's expenses that went from PRU into the sweep account and disappeared.

PRU estimates its total debt load to be about $13 million and its total assets are $726,500. Bailey said all of the company's hard assets (trucks, computers, washing machines) have been liquidated and were sold at auction toward the end of July for about $220,000.

"I've concluded that the $10 million went from PRI to the benefit of other entities besides PRU. That's what we're focusing our review on," Bailey said. "It goes into PRI, but didn't go to the benefit of PRU."

In early September, Bailey requested, and the court agreed, to force PRI to make available copies of consolidated tax returns that PRI and PRU jointly filed from 2004 through 2009, financial statements and work papers, copies of bank statements for the sweep, all financial statements prepared by outside accountants, copies of internal financial statements, general ledgers for PRU, PRI and any of PRI's affiliated entities, and all documents pertaining to inter-company transfers.

These must be presented by Sept. 25.

Bailey said tracking down the $10 million will then be possible.

"Once we're privy to their records, it's an easy step. Where did the money go? What entity had the benefit? Did they buy anything with it? ...Once we get those records, we can find that out fairly quickly," he said.

Part of that discovery process is a command that PRI co-owners Brad Goulding and Barbara Zimonja, plus controller Ariane Spicer, submit to examination under oath regarding the tracing of the monies and the relationship of the various entities controlled by PRI. The latter is scheduled for Sept. 30 at the law firm of Stoel Rives. Zimonja will be questioned Oct. 1 and Goulding Oct. 2 at the same location.

To prepare for those hearings, Bailey said about 20 subpoenas were sent out Sept. 14 to individuals who will be questioned about PRI's business dealings.

Bailey had another finding he said is hopeful. The accountant for the trustee has identified $24 million receivable owed by PRI to PRU based on the financial documents provided to Bailey by PRI. It's an asset he will initiate collection proceedings to recover for the benefit of the creditors.

In the short term, Park City attorney Joe Tesch is objecting that PRI has asked that its tax and financial records not be made public. The trustee has access, but attorneys for the creditors believe they're entitled as well to perform their own investigations.

On Sept. 10, Tesch filed a motion with the court and on Sept. 24 a decision will be made. Because the two entities voluntarily filed taxes jointly, Tesch believes all creditors deserve access to them.

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Copyright (c) 2009, Park Record, Park City, Utah

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