After a harrowing few weeks and months of looking for options, the second largest destination club filed for bankruptcy protection today.

Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws, (as opposed to Chapter 7 which governs the process of a liquidation bankruptcy).  

The overall filing listed 85 related companies which are going through this process. There are so many companies because many of the clubs individual homes are held in their own separate club owned companies. The filing showed estimated assets of $188,676,000 and estimated liabilities of $222,010,000.

As we reported last week, the largest secured creditor is Capital Source who is owed in the region of $97m. The club recently appointed Sheon Karol, of CRG Partners Group, as a Chief Restructuring Officer and he is staying on as part of the Chapter 11 filing.

The club has been in negotiations for the sale of the club for several months and in a press release today confirmed various discussions are still ongoing, saying: "UEI, in conjunction with its largest secured lender under an agented credit facility, is exploring the sale of its operations to another destination club, hospitality company, or investment group as well as other strategic alternatives. Efforts to explore such options had begun several weeks ago. Among the options which have been explored is the possibility of a stand-alone plan whereby members could acquire equity in the club."

In a note to members today the club informed them that it has "Debtor in Possession" financing to keep the club running for 30 days, until 19th October, giving it a window to complete any sales or restructuring. It also let members know that any reservations at leased homes are immediately terminated, as are member reservations at about 20 club owned homes. This leaves just over 70 club owned homes where members can travel for the next month.

Our article last weeks on Ultimate Escapes Restructuring included a lot of detail and background on the club and how it came to this position.

With the bankruptcy now in place, giving the ability to clean up the balance sheet, I hope that someone will put a deal in place that allows the members to keep travelling.

Partner Message

NBAA BACE 2021 - Business Aviation Conference