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Mount Holly Partners LLC, the Promoter Developing Utah's Elk Meadows
 Ski Area Into an Exclusive Resort, Filed for Chapter 11

By Mike Gorrell, The Salt Lake TribuneMcClatchy-Tribune Regional News

July 24, 2009 - Mount Holly Partners LLC, the company behind controversial plans to convert long-idled Elk Meadows ski area into an exclusive gated resort in the mountains above Beaver, filed for voluntary Chapter 11 bankruptcy on July 9.

But a week later, one of the company's largest unsecured creditors asked U.S. Bankruptcy Court for Utah to dismiss the case, claiming Mount Holly Partners was not authorized to file for bankruptcy without its consent as a co-manager of the proposed $3.5 billion project.

A hearing on the protest by MHU Holdings, LLC of New York City is scheduled for Aug. 11 before U.S. Bankruptcy Judge Kimball Mosier.

The bankruptcy filing does not mean an end to plans to turn Elk Meadow into a posh resort with multimillion-dollar homes, private ski runs and a golf course designed by Jack Nicklaus.

"Just the opposite," said Mount Holly attorney Douglas Short, of the firm Keith Barton & Associates in South Jordan. "It's a plan for reorganization to try to keep the resort going ... and still take care of the creditors."

Mount Holly's bankruptcy filing listed 106 creditors overall and said the company has assets of $100 million to $500 million and liabilities of $10 million to $50 million.

But an accompanying list of the 20 largest unsecured creditors put their claims alone against Mount Holly Partners at $67.7 million.

Leading the way was Litchfield Capital, LLC of Mesa, Ariz., owed $35 million. Next in line are two creditors who share an address and whose claims are being disputed: MHU Holdings ($4.1 million) and AMDS Holdings LLC/Bridlepath LLC ($18 million).

Also among the 20 largest unsecured creditors are Dow Jones Co. ($505,000), which sued Mount Holly in 2008 for not paying for a full-page ad in The Wall Street Journal , and Olympic gold medal skier Ted Ligety ($250,000).

Other creditors include Beaver County, Utah Jazz, the Nicklaus Children's Healthcare Foundation and several Salt Lake City law firms -- as well as Mount Holly Partners chief executive Stephen Jenson and his brother, Marc.

Neither Beaver County Commissioner Chad Johnson nor Carol McCulley, who led a citizens' group opposed to the resort, knew of the bankruptcy filing before Thursday.

Johnson said he knew a group of investors had purchased the resort's assets in a foreclosure sale last month, but feared the bankruptcy filing will force the county to rescind a development agreement with Mount Holly.

"If someone were to make it a public resort, it would make it easier for us [the commission]," Johnson said.

McCulley was aware the developers owed money to the county as well as private companies, but now is not optimistic that bankruptcy will improve their prospects of recovering what they are owed.

"No one's going to get any of their money right away," she said. "Doggone it, this just complicates the issue again."

Represented by attorney Mary Anne Wood, MHU Holdings contended the management of Mount Holly Partners was contentious from its start on Dec. 6, 2006.

That's when MHU Holdings said its $25 million investment in Mount Holly Partners gave it a 50 percent stake in the project, with Stephen Jenson's Holladay-based company, Ares Funding LLC, holding a 45 percent interest and serving as manager.

But MHU Holdings contends "from nearly the outset, disputes arose between MHU and Ares," leading to two separate agreements over the next 10 months in which MHU said it became a co-manager in exchange for more investments.

The disputes produced one lawsuit and a countersuit in New York and led Ares Funding to seek arbitration. The American Arbitration Association has scheduled a hearing for Sept. 14-25.

MHU Holdings said the arbitration matter should be resolved before bankruptcy can be sought. Mount Holly attorney Short declined to address MHU's points until responding in writing to the court.

Tribune reporter Mark Havnes contributed to this article.

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