Bank moves to take over troubled club
Seeks receivership for Hermitage properties
NEWFANE- Berkshire Bank has asked Windham County Superior Court to appoint a receiver to manage Hermitage assets currently under foreclosure.
On Monday, April 16, Berkshire Bank attorney Elizabeth A. Glynn filed an emergency motion for appointment of receiver, and at the same time filed a motion to shorten the Hermitage’s deadline for filing an objection to Monday, April 23. Berkshire Bank’s motion foresees a public auction of the properties at the end of their foreclosure process.
In support of the motion asking the court to appoint a receiver, Glynn says that the size, complexity, and value of the Hermitage assets requires a receiver to “manage and preserve” the property during the foreclosure proceedings. Glynn also alleges that the Hermitage is “no longer a going concern, able to pay its bills as they come due,” noting that Hermitage operations were shut down by the Vermont Department of Taxes three times, the last time on March 30, and is unable to conduct business in Vermont.
Glynn also lists a number of related expenses that Berkshire Bank has paid in order to maintain the viability of the property, including an $83,851 payment to Wilmington for the lease of town-owned land at the ski area; a $74,000 payment to the town of Dover for delinquent taxes to avoid a tax sale; $48,259.19 to Suburban Propane “for an emergency fuel delivery to keep the resort’s heat on during this unseasonably cold spring”; and $82,554.01 to Green Mountain Power “in response to a disconnect notice, and which will keep power on until May 6.”
But perhaps the largest expense borne by Berkshire Bank has been the payment of delinquent taxes to the town of Wilmington. “Wilmington has filed some 34 tax liens totaling about $814,000 against Hermitage Inn Real Estate Holding Company. By law, a tax sale must be scheduled if the delinquency is not paid. Berkshire Bank has just paid the town of Wilmington $660,321.58 to forestall a tax sale.”
At the Wilmington Selectboard’s regular meeting Tuesday evening, Wilmington Town Manager Scott Tucker confirmed that the town received Berkshire Bank’s payment.
The motion also suggests that the Hermitage has ceased operations, and has not paid some employees. “Upon information and belief (the Hermitage) owes employees payroll. Most have been laid off. A skeleton crew of a few employees remain on site.”
Glynn also refers to more than 35 liens and claims filed against the properties, as well as lawsuits filed against the club and Barnes, some of which allege fraud, concluding that the Hermitage can no longer care for the properties.
“The Vermont Department of Taxes shut Hermitage down for non-payment of taxes. Hermitage cannot pay its bills as they come due, nor can it afford employees to maintain and repair its infrastructure, and provide security for the property.”
Berkshire Bank’s motion asks the court to appoint, at the bank’s expense, Alan Tantleff, of FTI Consulting. According to their request, Tantleff and FTI have relevant experience in managing resort properties in receivership, including the Yellowstone Club, a similar private membership-only club.
The motion calls for the receiver to take possession and control of all Hermitage real and personal property subject to the foreclosure, as well as “all business records necessary in the reasonable determination of the receiver … to perform his powers and duties” and “access to review all mail and email of the Hermitage defendants except personal mail and privileged attorney-client communications which shall be turned over to the addressee.”
The receiver would also pay municipal assessments, lease payments, and insurance premiums; maintain heat and utilities for the properties; and pay for building and grounds maintenance and security.
The receiver would also cooperate and coordinate “with the auction company that conducts the judicial sale to prepare the subject properties for the public auction.”
Berkshire Bank filed for foreclosure on Hermitage properties in Wilmington and Dover on February 23 for failure to pay on three loans totaling $17.1 million. According to the complaint, the Hermitage owed $16,599,579 in principal, interest, and late charges on the loans. The foreclosure included the Hermitage Inn, Haystack Ski Area, Haystack Base Lodge, Haystack Golf Course, Chamonix townhouse village, the Snow Goose Inn, the Horizon Inn, and the Doveberry Inn, and numerous smaller properties.
In an answer to Berkshire Bank’s complaint filed on March 21 by Robert Fisher, attorney for defendants Hermitage Inn Real Estate Holding Company, the Hermitage Club, and James Barnes, the defendants admit most of the claims made in the complaint.
According to the answer, the amount due on loans is in dispute, and the defendants don’t agree to Berkshire Bank’s proposed redemption period of 30 days from the date of foreclosure.
Glynn and Fisher were not available for comment as of press time.