Judge orders Hermitage receivership
By Mike Eldred
NEWFANE- Windham Superior Court Judge John Treadwell has granted Berkshire Bank's emergency motion to appoint a receiver to care for Hermitage properties under foreclosure in a ruling issued today, Friday May 18.
Treadwell also appointed Berkshire Bank's proposed receiver, Alan Tantleff,of FTI Consulting to the position.
Berkshire Bank filed for foreclosure on several Hermitage properties, including Haystack Ski Area, the Hermitage Golf Course, the Hermitage Inn, the Doveberry, the Snow Goose Inn, the Horizon, and other properties, in February. In April, the bank filed an emergency motion asking the the court to appoint a receiver to protect and maintain the value of the property.
On Tuesday, May 10, Judge Treadwell heard testimony and arguments on the motion from Berkshire Bank Vice President Peter Landauer and the bank's attorneys James Anderson and Elizabeth Glynn, as well as from Hermitage attorney Bob Fisher and witness Trip Morse.
In his 10-page decision, Judge Treadwell indicated that the Hermitage's precarious financial situation was a key reason for granting the motion. “The Hermitage defendants lack sufficient resources to adequately protect and preserve the subject property, and thus the motion is granted.”
In their opposition to the motion, the Hermitage said that a receiver was unnecessary at this time, because the remaining Hermitage employees conducted daily security checks of the property. During the hearing, Fisher argued that a receiver was not needed during during summer months, after Landauer testified that the bank paid $82,554 to Green Mountain Power and $48,259 to Suburban Propane to keep the buildings heated during freezing spring weather. Fisher requested that, if court grants the motion to appoint a receiver, to wait until later in the summer.
Landauer also testified that the bank had paid more than $818,000 in unpaid taxes and other costs to Wilmington and Dover, and that there are numerous other tax liens, mechanics' liens, writs, and other encumbrances on the properties, totaling more than $12 million.
In their opposition, and supported by Morse's testimony at the hearing, the Hermitage also offered a heavily redacted term sheet regarding a proposed $26 million loan to the Hermitage by Rich Bonnanzio of NorthOne Capital Partners as evidence of imminent liquidity. But Treadwell was not persuaded by either the term sheet or the testimony, noting that neither Barnes or the potential lender testified at the hearing. “No competent evidence was presented at the hearing to support a finding that the proposed loan to (the Hermitage) has been made,” Treadwell said. “Indeed by its terms, the proposal has expired.”
In a footnote, Treadwell also noted that the request to delay the appointment of a receiver until late summer “is additional support for the conclusion that the proposed loan has not been made and, indeed, is not expected to be made in the near future.”
Summing up the court's findings, Treadwell said “There is no evidence to support a finding that the Hermitage defendants have adequate resources to preserve and protect the subject properties during the pendency of this foreclosure action. To the contrary, the evidence supports, and the court finds, that the Hermitage defendants do not have adequate resources to preserve and protect its land holdings.”
In making his decision, Treadwell said the potential harm to the Hermitage from the appointment of a receiver was “insubstantial” compared to the potential harm to Berkshire Bank if the property is not properly maintained. “The Hermitage defendants are not making use of the property in any substantive way,” Treadwell said. “The potential to (Berkshire Bank) is, in comparison, significant. The subject property is the sole collateral available.”
Today's decision did not include an order establishing Tantleff's duties as receiver. Instead, Judge Treadwell offered an outline of duties allowed under the law, and ordered Berkshire Bank to submit an ammended proposed order by May 24. A proposed order submitted before the hearing on Tuesday, May 10 did not reflect Landauer's testimony that the receiver may need to ready the resort for ski season, Treadwell noted.
“The (proposed order) proposes to maintain the property in a 'mothballed' condition. At the hearing, there was some suggestion that the property may need to prepared for the 2018/19 ski season if this matter is not resolved before then. If (Berkshire Bank) intends that the subject property be open for that season, theorder should address such a possibility. There was also discussion at the hearing of the need to groom the golf course grasses to maintain the value of the course for the next golf season. If any grass care by the receiver is contemplated, (Berkshire Bank) should include language sufficient to authorize such activity in the description of the receiver's duties.”
Judge Treadwell also directed Berkshire Bank to include a mechanism for dissolving the receivership in the event that the Hermitage is able to negotiate a proposed loan and pay their obligation to the bank.
The Hermitage has until Tuesday, May 29 to file any objection to Berkshire Bank's proposed order.