By Joseph Checkler
NEW YORK -- A judge on Tuesday said a group of luxury U.S.
resorts could tap half of a $10 million loan from Five Mile Capital
Partners that will carry the resort group through a Dec. 6 auction
of its properties.
Judge Sean H. Lane of the U.S. Bankruptcy Court in Manhattan
approved the additional funding from Five Mile despite concerns
raised by the resorts' creditors in court about whether the company
will be able to pay back the loan and the claims that it is
supposed to pay. The lawyer for the company's official committee of
unsecured creditors said his objection was more for later, when the
resorts plan to come back to court to ask for another $5
million.
The additional $5 million approved Tuesday is on top of an
existing $80 million bankruptcy loan for the resorts made by Five
Mile and Paulson & Co. Paulson, the hedge fund firm run by John
Paulson, owns a controlling stake in the resort group, officially
called MSR Resort Golf Course LLC. If Judge Lane approves the
additional $5 million at a hearing in December, that would bring
the total amount borrowed to $90 million. The approval also pushed
back the maturity date of the loan to Jan. 31, 2013, from Dec. 31,
2012.
MSR's laborious bankruptcy is nearing its climactic moment, the
Dec. 6 auction of four iconic properties: Maui's Grand Wailea
Resort Hotel & Spa, the La Quinta Resort & Club in La
Quinta, Calif.; the Arizona Biltmore in Phoenix; and the Claremont
in Berkeley, Calif.
The deal also includes the Great White Course, a Greg
Norman-designed golf course adjacent to the Doral Golf Resort &
Spa in Miami. A company controlled by Donald Trump in June bought
the Doral from Paulson for $150 million.
GIC RE, the real-estate arm of Singapore's sovereign wealth
fund, will kick off the bidding for the remaining resorts with its
$1.5 billion offer.
The resorts' trip through bankruptcy began more than a year and
a half ago, when Paulson teamed with Michael Ashner's Winthrop
Realty Trust (FUR) to seize the properties through a foreclosure
proceeding. Days later, the group put the resorts into Chapter 11
to avoid paying more than $1.5 billion in senior debt.
Since the filing, the company has made several structural
changes, reshaping contracts with property managers Hilton
Worldwide and Marriott International Inc. (MAR) and preparing its
resorts for sale so it can repay creditors.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Write to Joseph Checkler at joseph.checkler@dowjones.com. Follow
him on Twitter at @JoeCheckler
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