Source: https://www.scribd.com/document/51400967/CNL-declaration-CFO
Timestamp: 2018-03-19 15:44:25
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CNL declaration CFO | Mezzanine Capital | Chapter 11
CNL declaration CFO
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Docket #0003 Date Filed: 2/1/2011
James H.M. Sprayregen, P.C. Paul M. Basta Edward O. Sassower Chad J. Husnick KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Proposed Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: MSR RESORT GOLF COURSE LLC, et al.,1 Debtors. ) ) ) ) ) ) ) Chapter 11 Case No. 11-10372 (SHL) (Joint Administration Requested)
DECLARATION OF DANIEL KAMENSKY OF MSR RESORT GOLF COURSE LLC (A) IN SUPPORT OF DEBTORS’ CHAPTER 11 PETITIONS AND FIRST DAY MOTIONS AND (B) PURSUANT TO LOCAL BANKRUPTCY RULE 1007-21
The debtors in these chapter 11 cases, along with the last four digits of each debtor’s federal tax identification number include: MSR Resort Golf Course LLC (7388); MSR Biltmore Resort, LP (5736); MSR Claremont Resort, LP (5787); MSR Desert Resort, LP (5850); MSR Grand Wailea Resort, LP (5708); MSR Resort Ancillary Tenant, LLC (9698); MSR Resort Biltmore Real Estate, Inc. (8464); MSR Resort Desert Real Estate, Inc. (9265); MSR Resort Hotel, LP (5558); MSR Resort Intermediate Mezz GP, LLC (3864); MSR Resort Intermediate Mezz LLC (7342); MSR Resort Intermediate Mezz, LP (3865); MSR Resort Intermediate MREP, LLC (9703); MSR Resort Lodging Tenant, LLC (9699); MSR Resort REP, LLC (9708); MSR Resort Senior Mezz GP, LLC (9969); MSR Resort Senior Mezz LLC (7348); MSR Resort Senior Mezz, LP (9971); MSR Resort Senior MREP, LLC (9707); MSR Resort Silver Properties, LP (5674); MSR Resort SPE GP II LLC (5611); MSR Resort SPE GP LLC (7349); MSR Resort Sub Intermediate Mezz GP, LLC (1186); MSR Resort Sub Intermediate Mezz LLC (7341); MSR Resort Sub Intermediate Mezz, LP (1187); MSR Resort Sub Intermediate MREP, LLC (9701); MSR Resort Sub Senior Mezz GP, LLC (9966); MSR Resort Sub Senior Mezz LLC (7347); MSR Resort Sub Senior Mezz, LP (9968); and MSR Resort Sub Senior MREP, LLC (9705). The location of the debtors’ service address is: c/o CNL-AB LLC, 1251 Avenue of the Americas, New York, New York 10020.
K&E 18268228
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I, Daniel Kamensky, declare as follows: 1. I serve as the Secretary and Treasurer of each of the above-captioned debtors
(collectively, the “Company” or the “Debtors”) in these chapter 11 cases.2 In addition to my role with the Debtors, I also am a partner at an affiliate of Paulson & Co. Inc. I am generally familiar with the Debtors’ day-to-day operations, business affairs, and books and records, as well as the Debtors’ restructuring efforts. I submit this declaration (this “Declaration”) in accordance with Rule 1007-2 of the Local Bankruptcy Rules for the Southern District of New York (the “Local Bankruptcy Rules”) to assist this Court and parties in interest in understanding the circumstances that compelled the commencement of these chapter 11 cases and in support of: (a) the Debtors’ petitions for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) filed on the date hereof (the “Petition Date”); and (b) the emergency relief that the Debtors have requested from the Court pursuant to the motions and applications described herein (collectively, the “First Day Pleadings”). 2. The First Day Pleadings seek relief necessary to avoid immediate and irreparable
harm to the Debtors by allowing them to continue their operations and minimize disruptions to their business that could otherwise result from the commencement of these chapter 11 cases. Specifically, the First Day Pleadings seek relief allowing the Debtors to: (a) stabilize and maintain their business operations through, among other things, the use of cash collateral; (b) preserve relationships with resort property managers and other key constituencies; (c) limit disruption to the Debtors’ business by continuing the use of their prepetition cash management
As described below, CNL-AB LLC became the equity owner in the Debtors on January 28, 2011. The following declaration contains the most complete and accurate information I have been able to obtain during the period of time I have had an involvement with the Debtors’ businesses.
system; and (d) establish certain administrative procedures to facilitate an orderly transition into, and uninterrupted operations throughout, the chapter 11 process. 3. Except as otherwise indicated, all facts set forth in this Declaration are based upon
my personal knowledge, my discussions with other members of the Debtors’ management team, Pyramid Resort Asset Management LLC, and the Debtors’ advisors, my review of relevant documents and information concerning the Debtors’ operations, financial affairs, and restructuring initiatives, or my opinions based upon my experience and knowledge. If called as a witness, I could and would testify competently to the facts set forth in this Declaration. I am authorized to submit this Declaration on behalf of the Debtors. 4. To assist the Court in familiarizing itself with the Debtors, their business, and the
initial relief sought by the Debtors to stabilize operations and facilitate their restructuring, this Declaration is organized into four sections. Section I provides background information with respect to the Debtors’ corporate history and their business operations, as well as a summary of the Debtors’ prepetition capital structure. Section II describes the circumstances leading to the commencement of these chapter 11 cases. Section III summarizes the relief requested in, and the facts supporting, each of the First Day Pleadings. Section IV provides an overview of the exhibits attached hereto that set forth certain additional information about the Debtors, as required by Local Bankruptcy Rule 1007-2. PRELIMINARY STATEMENT 5. The Debtors constitute a business enterprise that invests in, owns and operates
five iconic luxury resort properties with related real estate properties and amenities, including 14 separate golf courses, over 35 food and beverage outlets, and over 432,000 square feet of meeting space in the United States. Specifically, the resorts are: (a) the Grand Wailea Resort Hotel & Spa (“Grand Wailea”) in Maui, Hawaii; (b) the La Quinta Resort & Club and PGA West 3
together with other investors. The managing member of CNL-AB with respect to these assets are affiliates of Paulson & Co.(“La Quinta”) in La Quinta. 4 .2 million. 2011 foreclosure on 100% of the membership interests in MS Resorts III. and (e) the Claremont Hotel Club & Spa (“Claremont”) in Berkeley. The affiliates of Paulson and Winthrop. one of the largest hedge funds in the world with approximately $36 billion of assets under management and an investor with considerable real estate and restructuring expertise. Arizona. the “Resorts”). these five Resorts and related assets produced approximately $433 million in consolidated revenues and approximately $46.3 Paulson’s primary partner with respect to these assets is a joint venture. (“Paulson”). affiliated with Winthrop Realty Trust (“Winthrop”). recently became the indirect parent of each of the Debtors following CNL-AB’s January 28. Florida. I am a partner at Paulson. In 2009. a real estate investment trust with over $500 million of assets. CNL-AB is a joint venture consisting of affiliates of sophisticated real estate investors. (d) the Doral Golf Resort & Spa (“Doral”) in Miami. This decline in revenue and net operating income corresponded to the economic decline in the United States and the world through this period.3 million and $153. The Debtors’ irreplaceable assets were not immune to the economic turmoil that reduced travel and business and consumer spending through this period. California (each a “Resort” and collectively. Inc. 6. in 2007. in addition to my role with the Debtors. each of the Debtors are wholly-owned indirect subsidiaries of non-Debtor CNL-AB LLC (“CNL-AB”).4 million in adjusted net operating income compared to approximately $588. LLC (the “Corporate Mezzanine B Borrower”) (the non-Debtor 3 As discussed above. (c) the Arizona Biltmore Resort & Spa (“Arizona Biltmore”) in Phoenix. California. As indicated on the diagram of the Debtors’ corporate structure attached hereto as Exhibit A (and as further discussed in Section I.B below). respectively.
As a result of this recent progress. As new owner of the Debtors. Given that 5 . In addition.. no viable solution was produced by the previous owners and progress had stalled. 9. they will be able to broker an agreement with the Debtors’ remaining constituencies on the terms of a consensual restructuring of the Debtors’ outstanding indebtedness. and related assets. in a variety of ways. i.indirect parent of each of the Debtors). however.e. which membership interests were pledged as security under a $200 million loan to non-Debtor affiliate MS Resorts IV. In January of 2011. 2011. given a reasonable opportunity. Despite these significant efforts. CNL-AB’s most pressing concern as new indirect parent of each of the Debtors was the imminent maturity of approximately $1. LLC (the “Corporate Mezzanine C Borrower”) held by CNL-AB. the previous owners of the Debtors and their non-Debtor affiliates had been attempting. CNL-AB believes there is significant value in the assets and is focused on reorganizing the Debtors’ businesses. reaching an agreement with the prior equity holders and the other corporate mezzanine lenders that effectively eliminated $600 million of mezzanine debt and eliminated the obligation to pay $200 million in structurally subordinated preferred equity. and positioning these assets to better compete with their peer group to maximize the value of the Debtors’ irreplaceable Resorts. CNL-AB took a significant step toward a comprehensive restructuring of the Debtors’ balance sheet. the Debtors (and CNL-AB) are optimistic that. 7. to address cash shortfalls and recapitalize the Debtors’ debt structure in a consensual manner. the Debtors believe there is tremendous value in the Debtors’ excess land. 8. Since October of 2009.5 billion of the Debtors’ secured debt on February 1. real estate. a mere four days following the completion of the foreclosure. improving the efficiency of the Debtors’ management and operations.
CNL-AB cooperated with the previous owners of the Debtors prior to the foreclosure in an attempt to obtain limited extensions of the maturities of the Debtors’ loans to facilitate continued negotiations on the terms of a consensual restructuring after the foreclosure was completed. has 692 rooms/suites. and approximately 18. built in 1991 on 40 acres of beachfront property on the island of Maui. The Arizona Biltmore. and Greg Norman.000 square foot spa. California resort area. and deterioration of value. a 22.000 square foot spa. the Debtors were unable to achieve a limited extension of the loan maturities obligations and were left in a position where they would have been unable to pay all of their debts when due. Accordingly.limited time period. and nine championship golf courses designed by some of golf’s legends. 11. Florida. built in 1962 in Miami. 10. the Debtors commenced these chapter 11 cases. has 739 rooms/suites.000 square feet of meeting space.000 square feet of meeting space. The Debtors’ Resorts are iconic luxury properties located in some of the most desirous destinations in the United States: • The Grand Wailea. Substantial value exists in the Resorts and the Debtors’ other assets. approximately 91. Arizona.000 square feet of meeting space. approximately 100. a 50. built in 1926 on 45 acres at the base of the Santa Rosa Mountains in the Palm Springs. and architecture influenced by Frank Lloyd Wright (who served as a consultant during the Arizona Biltmore’s design and construction). and the Debtors remain confident in the prospects of their business on a going-forward basis. The Doral. Unfortunately. approximately 87. approximately 66.000 square feet of retail space. in order to protect and preserve their assets from disruption. has 780 rooms/suites. confusion.000 square foot spa. including Pete Dye. Jack Nicklaus. built in 1929 in Phoenix. a 50. given their numerous creditor constituencies. The La Quinta.000 square feet of meeting space. a 23. and the timing of the impending maturity date. has 796 rooms/suites.000 square foot 6 • • • .
Contemporaneously herewith. the Debtors’ excess land holdings and extensive existing and potential entitlements are potential sources of future growth and value for the Debtors. the Debtors have filed a standard set of first-day pleadings that will allow the Debtors to operate the Resorts in the ordinary course and minimize disruptions to their businesses. retail operations. and five championship golf courses. and a 20. especially given the extremely limited amount of new supply expected in the luxury resort market. 14. approximately 26. The Debtors believe that it is critical for CNL-AB and all of the Debtors’ other stakeholders to fully understand the Debtors’ material contracts. Entitlements are rights granted generally by local planning or zoning boards to use excess land for other uses. has 279 rooms/suites. golf. Moreover. one of which hosts an annual PGA tour event. Accordingly. operations. 13. assets. and • The Claremont.spa. management. The Resorts generate a variety of revenue streams with their significant spa. including commercial or residential developmental uses. and food and beverage outlets.500 square feet of meeting space. The recent change to the ultimate equity ownership of the 7 . which can be used to satisfy the obligations owed to the Debtors’ existing constituents. built in 1915 and overlooking the San Francisco Bay. and liabilities to achieve a successful restructuring of the Debtors’ obligations and maximize the value of the Debtors’ estates. the Debtors believe that the hospitality industry is at or near the bottom of a historic down-cycle and is poised for a significant recovery in the years ahead. 12. Carefully considering all aspects of the Debtors’ business will allow the Debtors to determine the amount of value that exists. Finally.000 square foot spa. the Debtors are optimistic that the revenue-generating capabilities of their Resorts together with significant embedded real estate values will permit the Debtors to satisfy all of their outstanding secured debt obligations over time.
an affiliate of the Doral Resort Manager. The Debtors are confident that they will be able to consummate an expeditious. Pyramid Acquisition II Management L. the Debtors invest in and own five iconic luxury resort properties and amenities in the United States. 5 8 .5 the Revenue collected at each Resort is received by the respective Resort Manager and deposited into certain accounts. which are held by the Tenant Entities (as defined below). The payment of the majority of Doral’s operating expenses is made from the Centralized Account. While the Resort Managers are charged with responsibility for all of the day-to-day tasks associated with 4 The Debtors’ Resort Managers are: 90210 Management Company. There is a centralized account (the “Centralized Account”) held by Marriott Business Services. that is the initial recipient of certain Revenue generated at Doral. and Marriott International. I. A. and other miscellaneous income (collectively. comprehensive restructuring of their obligations that will maximize the value of the Debtors’ estates for the benefit of all constituents. store rentals and concessions. GENERAL BACKGROUND Company Business and Overview. destination services. the “Revenue”). resort charges. Grand Wailea. engage with the Debtors’ constituents. including depository and operating accounts (the “Operating Accounts”). spas. food and beverage. Specifically. As noted above. cash is generated from revenues related to resort rooms. golf memberships and greens fees. and La Quinta). The Resorts are managed by non-affiliated third-party managers (collectively. parking.P. Inc. (for Claremont). and develop an appropriate restructuring strategy. The cash management system at Doral operates differently. The Debtors generate and receive cash from operation of the Resorts. 15.Debtors necessitates a reasonable period for CNL-AB to undertake the required analyses. After payment of operating expenses at Doral is complete. (for Doral). Marriot then transfers any excess revenue to Doral’s single Operating Account held by the respective Tenant Entity (as defined below). LLC (a/k/a Hilton/Waldorf-Astoria) (for Arizona Biltmore. the “Resorts Managers”)4 and certain aspects of the Debtors’ business is managed by the Asset Manager. Except with respect to Doral.
2010. it is the Operating Accounts that fund the majority of the Resort operating costs. the Debtors used remaining net Resort Revenues to pay the Debtors’ other obligations. As noted above. and equipment reserve account that is set aside to make certain improvements to the Resorts. the Debtors themselves do not have any employees. The reserve account is held in the name of the Property Owning Entities (as defined below). 16. Consolidated revenues for the three months ending December 31.operating and managing the Resorts.800 Resort employees are provided by the Resort Managers and most of the Debtors’ corporate functions are provided by the Asset Manager. it is the Resort Managers who are most familiar with the day-to-day operations of the Resorts. the Resorts have a capital expenditure and furniture. Furthermore. 2010 were approximately $121 million. While the Debtors monitor and oversee Resort operations through the Asset Manager. none of the Resort Managers serve on any of the Debtors’ boards of directors or have an ownership interest in the Debtors. The Debtors transact with the Resort Managers on an arm’s-length basis. As of November 30. $465 million. The Resort Managers are not affiliated with the Debtors and. to the best of my knowledge. Prior to the Petition Date. fixture. Consequently. and reserves for working capital. 19.2 billion and consolidated liabilities totaling approximately $1. These obligations included debt service on the Mortgage Loan (as defined below) and the Mezzanine Loans (as defined below). 18. after payment of Resort operating costs. management fees to the Resort Managers. Consolidated 2010 annual revenues were approximately 9 . the Debtors’ financial statements reflect consolidated assets totaling approximately $2. The approximately 3. the Debtors rely on the Resort Managers to manage the Resorts. 17.9 billion.
MSR Grand Wailea Resort. the “Property Owning Entities”).7 Certain other Debtors (collectively. LP. MSR Claremont Resort. 2011 foreclosure. the “Tenant Entities”)8 lease the Resorts 6 The resorts owned by the 3 Pack Entities are: the JW Marriott Grande Lakes in Orlando. and improvements on the Resort properties (collectively. and renamed each of the entities that was a “CNL” entity as a “MSR” entity. LP. The Debtors’ Corporate History and Organizational Structure. 20. LP. n/k/a MSR Hotels & Resorts. Morgan Stanley Real Estate. as a result of the January 28. CNL Hotels & Resorts. the indirect owners of the Resorts) at the peak of the market for approximately $4 billion. acquired CNL Hotels & Resorts.” A diagram of the Debtors’ organizational structure is attached hereto as Exhibit A. 21. Inc. Arizona. together with certain other investors (collectively. the new owners largely retained the organizational structure that had been in place. buildings. The Debtors are structurally organized generally in a fashion typical for the ownership and operation of properties by a real estate investment trust. and MSR Resort Golf Course LLC. (and together with MS Resort Purchaser LLC. in 2007. are indirect subsidiaries of CNL-AB. the CNL Acquirers also indirectly own three luxury resorts that have their own capital structure (collectively. Inc. MSR Resort Silver Properties.6 The Debtors are all indirect subsidiaries of MSR or MS Resort Purchaser LLC. In April 2007. Inc. the RitzCarlton Grande Lakes in Orlando. LP. which. Accordingly. Inc. LP. The Property Owning Entities are the Mortgage Borrowers (as defined below) and are the following seven Debtors: MSR Biltmore Resort. LP.B. Certain of the Debtors own the land. Florida. At the time of the acquisition. an affiliate of Morgan Stanley. The 3-Pack Entities also are indirect subsidiaries of CNL-AB but are not part of this bankruptcy filing. the “3 Pack Entities”). and the JW Marriott Desert Ridge in Phoenix. became MSR Hotels & Resorts. MSR Resort Hotel. Florida. or “REIT. MSR Desert Resort. Inc. (“MSR”). As a result of the acquisition of CNL Hotels & Resorts. the “CNL Acquirers”). 7 10 .
as security for the mezzanine loans. which encumbers. There are three Mezzanine Borrowers for each level of mezzanine debt. Each Mezzanine Borrower pledged. The most senior Mezzanine Borrower owns the equity of the Property Owning Entities. None of the Mezzanine Borrowers. During the term of each lease. The Tenant Entities engage the Resort Managers to operate the Resorts pursuant to management agreements. the “Mortgage Borrowers”) under the Mortgage Loan.C below. 11 . is attached hereto as Exhibit B. and (b) certain other additional charges to the Property Owning Entities (comprised of six limited partnerships and one limited liability company). The Mezzanine Borrowers are organized as limited liability companies or limited partnerships. LLC. other than the most senior Mezzanine Borrower. collectively. and the Resort Manager. 8 The Tenant Entities are the following two Debtors: MSR Resort Lodging Tenant. each of the Resort properties. the “Mezzanine Lenders. LLC and MSR Ancillary Tenant. the equity of the entity that each Mezzanine Borrower owns directly to the respective lenders (collectively. including the Property Owning Entity and Tenant Entity specific to each Resort. the “Mezzanine Borrowers”). among other things. 22. a “Mezzanine Borrower” and. and pay rent to.from.” as further defined herein). The Debtors that directly and indirectly own the Property Owning Entities are the borrowers under four levels of mezzanine loans (each. the Property Owning Entities in accordance with certain lease agreements. the Tenant Entities (comprised of two limited liability companies) are obligated to pay (a) the greater of a fixed annual base rent or percentage rent. The Property Owning Entities are each borrowers (collectively. as further detailed in Section I. have assets other than the equity of the Mezzanine Borrower owned directly by each such Mezzanine Borrower. A list of the Debtors’ Resorts.
by and among the Mortgage Borrowers and Bank of America. 10 12 . the Debtors had secured debt in the aggregate amount of approximately $1. 1. dated as of January 9. replaced. the “Mezzanine Loans”) in the aggregate principal amount of $525 million. priority. an admission by the Debtors regarding the validity. and should not be construed as. The Mortgage Borrowers are borrowers under the Loan and Security Agreement. consisting of (a) a $1 billion mortgage loan (the “Mortgage Loan”) and (b) four tranches of mezzanine loans (each. enforceability. mortgage. and the Debtors reserve all rights to challenge or dispute any of the foregoing on any basis whatsoever except to the extent as set forth in the Motion of MSR Resort Golf Course LLC.. 2006 (as amended. et al. The descriptions of the Debtors’ prepetition debt obligations and the collateral securing those facilities provided herein does not constitute.23. Inc. Granting Related Relief. the “Brokerage Entities”)9 operate as brokerage companies for the sale and leasing of property at or around La Quinta and Arizona Biltmore and enter into rental pool arrangements with various condominium and villa owners pursuant to which the condominium or villa units are booked through La Quinta’s or Arizona Biltmore’s reservations systems. In accordance with the transactions described below.525 billion. or other security interest or any other fact with respect thereto. Inc. Certain other Debtors (together. as successor by merger to LaSalle Bank National Association. and Scheduling a Second Interim Hearing. for the Entry of Interim Order Authorizing Cash Collateral Use. Prepetition Capital Structure. a “Mezzanine Loan” and. collectively. guarantee. claim. Mortgage Loan. filed contemporaneously herewith. or amount of any obligation. restated. supplemented. or otherwise modified from time to time. The instruments evidencing the Debtors’ indebtedness are described below. respectively. 25. perfection. as trustee for the Certificate Holders of Deutsche Mortgage & Asset 9 The Brokerage Entities are the following two Debtors: MSR Resort Biltmore Real Estate. pledge. and MSR Resort Desert Real Estate. the “Mortgage Loan Agreement”). National Association. as of the Petition Date. lien. C.10 24.
Receiving Corporation. the “Mortgaged Properties”). COMM 2006-CNL2 Commercial Mortgage Backed Certificates (as successor in interest to German American Capital Corporation. 13 . Accordingly. both non-debtor subsidiaries of CNL-AB. The guarantors of the non-recourse carve-out provisions of the Mortgage Loan are MS Resort Purchaser LLC and MSR (together the “Guarantors”). including the Resorts (collectively. The Mortgage Loan matures on February 1. the non-recourse carve-out guarantee is not triggered if a Mortgage Borrower commences a bankruptcy case at a time when it is unable to pay its debts as they come due. 27. there are certain non-recourse carve-outs under the Mortgage Loan that are triggered if. Although the Mortgage Loan is non-recourse to the Mortgage Borrowers. an order for relief is entered with respect to the Mortgage Borrower under the Bankruptcy Code through the actions of the Mortgage Borrowers of any of its affiliates at a time when the Mortgage Borrower is able to pay its debts as they become due unless Mortgage Borrower or guarantor receives an opinion of independent counsel that the directors of the Mortgage Borrower have a fiduciary duty to seek such relief. and the products and proceeds thereof. and together with its successors and assigns. In addition to the Prepetition Mortgages. Pursuant to the Mortgage Loan Agreement and the other documents executed in connection therewith. which principal amount remains outstanding as of the Petition Date. 2011. including the cash generated by the Resort operations. the Mortgage Loan is secured by pledges of the equity interests of the Brokerage Entities. the Mortgage Lender extended financing to the Mortgage Borrowers in the aggregate principal amount of $1 billion. The Mortgage Loan is secured by cross-collateralized and cross-defaulted first priority mortgages (the “Prepetition Mortgages”) on certain of the Debtors’ properties. the “Mortgage Lender”). among other things. 26.
German American Capital Corporation sold its interest in the Mortgage Loan to Deutsche Mortgage & Asset Receiving Corporation. each dated as of January 9. as successor by merger to LaSalle Bank National Association. 29. as each may have been amended. MSR Resort Sub Senior MREP. Midland Loan Services. LP. by and among Deutsche Mortgage & Asset Receiving Corporation. LLC. in February 2006. were the initial purchasers of the interests in the Trust. which in turn. 2. MSR Resort Senior MREP. MSR Resort Senior Mezz. 30. Subsequent to the closing date of the Mortgage Loan Agreement. Banc of America Securities LLC. MSR Resort Intermediate MREP. 2006 (such Trust Agreement and Servicing Agreement. LLC. certain investors (the “Certificate Holders”) bought the interests held by those initial purchasers. LLC. each dated as of February 1. The Mezzanine Borrowers11 are borrowers under four separate Mezzanine Loan Agreements. J. MSR Resort Sub Senior Mezz LLC. LP. LNR Partners.P. There are various classes of Certificates. Inc. LLC. Deutsche Bank Securities Inc. and in turn. Morgan Securities Inc. the “Mezzanine Loan 11 The Mezzanine Borrowers are the following twelve Debtors: MSR Resort Senior Mezz LLC. The Certificate Holders were then issued certificates (the “Certificates”) representing beneficial interests in the Trust. The rights of the Certificate Holders are governed by the Trust Agreement and the Servicing Agreement.28. deposited the Mortgage Loan into a trust (the “Trust”). 2006 (collectively. (“Midland”). collectively. MSR Resort Sub Intermediate Mezz. LP. as master servicer. as trustee. MSR Resort Sub Senior Mezz.. Mezzanine Loan Agreements. as initial special servicer. Midland currently acts as the special servicer of the Mortgage Loan. and MSR Resort Sub Intermediate MREP. MSR Resort Intermediate Mezz. Inc. 14 . MSR Resort Intermediate Mezz LLC. National Association. and Bank of America. MSR Resort Sub Intermediate Mezz LLC. LP. and Lehman Brothers Inc. the “Trust and Servicing Agreement”). as depositor.. modified or supplemented.
the beneficial owner of which is the National Government of Singapore). among other things. as of the Petition Date. 15 . 2011. The Mezzanine Loans mature on February 1. 2006. As of the Petition Date. Although the Mezzanine Loans are non-recourse to the applicable Mezzanine Borrowers. 31. a Singapore corporation (on information and belief. Accordingly. among other things. C Hotel Mezz Private Limited (f/k/a RE NA Investments Private Limited).Agreements”). dated as of January 9. 3.12 As described above. their rights and the exercise of remedies in connection with an Event of Default (as 12 Upon information and belief. the “Mezzanine Lenders”). 450 Lex Private Limited. the non-recourse carve-out guarantee is not triggered if a Mezzanine Borrower commences a bankruptcy case at a time when it is unable to pay its debts as they come due. that governs certain of their respective rights and interests in the Mortgage Loan and the Mezzanine Loans relating to. an order for relief is entered with respect to a Mezzanine Borrower under the Bankruptcy Code through the actions of a Mezzanine Borrower of any of its affiliates at a time when the Mezzanine Borrower is able to pay its debts as they become due unless Mezzanine Borrower and guarantor receive an opinion of independent counsel that the general partner of the Mezzanine Borrower has a fiduciary duty to seek such relief. there are certain non-recourse carve-outs under the Mezzanine Loans that are triggered if. a Singapore corporation (on information and belief. the beneficial owner of which is the National Government of Singapore). Intercreditor Agreement. The Mezzanine Loans are not secured by any of the Resorts or any of the other collateral securing the Mortgage Loan. Upon information and belief. including the cash and proceeds generated from the Resorts. the Mortgage Lender and the Mezzanine Lenders entered into an Intercreditor Agreement. the Mezzanine Loans are secured by pledges of equity. the outstanding aggregate principal balance under the Mezzanine Loans is approximately $525 million. and Five Mile Capital SPE B LLC (collectively. The non-recourse carve-out provisions of the Mezzanine Loans are guaranteed by the Guarantors. the Mezzanine Loans are held by Metropolitan Life Insurance Company.
and a severe decline in business and personal travel. and the payment subordination of the Mezzanine Loans to the payment in full of the Mortgage Loan. the Debtors have suffered not only from a plunging drop in the demand for resort accommodations. a combination of average daily rate (“ADR”) and occupancy rate metrics. and expense of operating and managing the Resorts. golf memberships and greens fees. The Debtors’ overleveraged balance sheet. A. coupled with the difficulties in the hospitality industry. and the Debtors’ considerable debt load. higher fuel prices. but also from a severe decline in food and beverage sales.defined in the Intercreditor Agreement) and in the event of a bankruptcy filing of their respective borrowers. In addition. including related enforcement and turn-over provisions. The Debtors face a decline in liquidity that can be attributed both to the impact of the global economic crisis on performance of the hospitality industry. which has decreased significantly with the general economic downturn. II. meeting. conference and banquet hall rentals.525 billion debt that matures on February 1. several of the Debtors’ constituencies have raised questions regarding the efficiency. In the hospitality industry. has made it impossible at this time for the Debtors to refinance their approximately $1. Moreover. and other 16 . cost. A primary contributor to this decline is the Debtors’ reliance on group business from large corporate clients. EVENTS LEADING TO THE CHAPTER 11 CASES Recent Economic Crisis and Its Impact on the Hospitality Industry and the Debtors. the Debtors have since operated in a difficult financial environment— one plagued with reduced business and consumer spending. Although the Resorts were acquired during the peak of the United States real estate market in 2007. 2011. 33. 32. topics which likely will need to be explored during the chapter 11 cases. one measure of performance is revenue per available room (“RevPar”). Reduced business and consumer spending industry-wide has had a devastating impact on occupancy rates at the Resorts. increased unemployment.
respectively.similar guest services. as compared to 2007 levels. and retail stores in the Resorts. the Debtors’ RevPar. the Debtors’ RevPar. Prepetition Restructuring Efforts. they continue to maintain significant value despite these declines. 35. Operational and management inefficiencies further exacerbated the Debtors’ decline in financial performance. B. a 63% decline. To address the Debtors’ liquidity constraints and the impending maturity of the Mortgage Loan and Mezzanine Loans. 16 percent. which matures on February 1. ADR. Even though there has been some improvement since 2009.2 million in 2007 to $56. and a large funded debt burden. 34. and 18 percent. golf courses. restaurants.4 million in 2010. have all combined to impair the Debtors’ ability to meet their current debt obligations. in 2010. liquidity constraints. ADR and occupancy rate metrics decreased by more than 31 percent. this decline in ancillary spending has also had a considerable adverse impact on the Debtors’ revenue. ADR and occupancy rate metrics decreased by more than 26 percent. makes the decline in the Debtors’ revenues easily apparent. Operating losses from decreased Resort occupancy and room revenue. but also from ancillary purchases by Resort guests and members. respectively. a comprehensive restructuring of the Debtors’ capital structure is necessary for the Resorts to continue to operate and to preserve and maximize value. the Debtors’ previous owners made several attempts to 17 . As the economy continues to recover. and 10 percent. In 2009. 17 percent. In addition. the Debtors believe RevPar. A comparison of the 2009 and 2010 statistics against those of 2007 (the year in which the Resorts were acquired). because of the scale and amenities of the Resorts. as compared to 2007 levels. which recently has been the case. and occupancy rate metrics will recover. such as those made at the spas. As the Debtors’ revenue stream relies not only on the income received from guest stays at the Resorts. Accordingly. 2011. driving adjusted net operating income from $153.
respectively and are loans made to MS Resorts II.P. The default on the “C” tranche of the Corporate Mezzanine Loans was never cured. the “Corporate Mezzanine Loans”) are not secured by any of the Resorts or any of the other collateral securing the Mortgage Loan. The obligations of the Corporate Mezzanine Borrowers under their respective Corporate Mezzanine Loan Agreements (collectively. respectively. allowing the “C” tranche Corporate Mezzanine Lender to enforce its rights and remedies. began to negotiate a restructuring of the $600 million in the aggregate Corporate Mezzanine Loans. the prior equity owners of the Debtors. each dated April 12.S. LLC (“Corporate Mezzanine A Borrower”) and Corporate Mezzanine B Borrower. Thereafter. however. The two most senior tranches of the Corporate Mezzanine Loans are known as the “A” and “B” tranches. the forbearance period ended mid-November 2010. (“MSREF”). 36. These efforts. the Corporate Mezzanine Lenders and Morgan Stanley Real Estate Fund V U. the “Corporate Mezzanine Loan Agreements”). MSREF cured the defaults on the “A” and “B” tranches. which is a loan made to Corporate Mezzanine C Borrower. L. each of the borrowers under certain loans to the Debtors’ non-Debtor indirect parent companies made by certain lenders (the “Corporate Mezzanine Lenders”)13 defaulted on its respective tranche of the Corporate Mezzanine Loans. are lenders under three separate mezzanine loan agreements (collectively. 18 .. In October 2010. which include CNL-AB. Although a forbearance agreement was executed with respect to the “C” tranche of the Corporate Mezzanine Loans. the “Corporate Mezzanine Borrowers”) in the aggregate principal amount of approximately $600 million.restructure their debt obligations. including foreclosure on the equity of the Corporate Mezzanine 13 The Corporate Mezzanine Lenders. including the cash and proceeds generated from the Resorts. The most junior tranche of the Corporate Mezzanine Loans is known as the “C” tranche. Because a resolution was not forthcoming. 2007. by and among the Corporate Mezzanine Lenders and certain non-debtor direct and indirect subsidiaries of MS Resort (collectively. including reaching out to Midland to request an extension on the Mortgage Loan and making a comprehensive restructuring proposal to the various constituents. failed to gain sufficient support and the parties remained unable to reach agreement on the terms of a restructuring that could assure the long-term viability of the Resorts.
CNL-AB sought a declaratory judgment in the Court of Chancery of the State of Delaware (the “Chancery Court”) providing that Eastern Property did not have a legal interest in the Corporate Mezzanine B Borrower and.B Borrower. and the Corporate Mezzanine Borrowers finalized the terms of their restructuring agreement and entered into certain agreements with CNL-AB. 38. Instead of exercising remedies at that time however. MSREF obtained certain contingent co-investment rights and the right to transfer such co-investment rights to other investors in MS Resort Senior Holdings LLC (“MS Resort”). Under the agreements. CNL-AB gave notice of its intent to enforce its right under the “C” tranche of the Corporate Mezzanine Loans against Corporate Mezzanine C Borrower by pursuing two alternative proceedings to foreclose on the equity of the Corporate Mezzanine B Borrower pledged to secure such loans. MSREF. which foreclosures were set to occur as soon as January 26. 2011. the parties elected to continue to negotiate a consensual resolution. and the lenders under the “A” and “B” tranches of the Corporate Mezzanine Loans pursuant to which MSREF funded CNL-AB’s purchase of the “C” tranche of the Corporate Mezzanine Loans in exchange for releases from certain non-recourse carve-out guarantees with respect to the Corporate Mezzanine Loans. 2011. 37. the Corporate Mezzanine Lenders. On January 19. On January 6. As discussed above. 39. Eastern Property is the holder of a $200 million preferred equity investment in 19 . thus. in response to certain threats made by Eastern Property Fund I SPE (MS REF) LLC (“Eastern Property”) related to CNL-AB’s foreclosure process. 2011. had no legitimate basis with which to interfere with CNLAB’s foreclosure. on January 6. 2011. the Debtors’ former indirect parent company. the joint venture comprised of lenders in the “A” and “B” tranches of Corporate Mezzanine Loans.
MS Resort. MS Resort. As a result. with the intention of capitalizing on the momentum of the recent progress but faced with an impending maturity payment default on February 1. In addition. MS Resort Managing Member. 42. This was a significant first step toward achieving a comprehensive restructuring of the Debtors’ capital structure. the Chancery Court denied Eastern Property’s pending request for a temporary restraining order or preliminary injunction. 2011. Eastern Property also filed a motion for a temporary restraining order and preliminary injunction to prevent CNL-AB. the restructuring agreements reached as a result of the efforts led by CNL-AB. CNL-AB was able to complete its foreclosure action on January 28. 40. on the same day. 2011. 20 . On January 21. Following the foreclosure. and MSREF effectively eliminated $600 million of mezzanine debt14 and eliminated the obligation to pay $200 million in structurally subordinated preferred equity. thus. the other Corporate Mezzanine Lenders. which before the foreclosure was an indirect parent company of the Debtors (and. On January 28. the Debtors sought to enter into extension agreements with the lenders under the Mortgage Loan 14 The Corporate Mezzanine Loans were contributed to a joint venture in connection with the restructuring transactions. 2011. 41. at which point it became the equity owner of the Corporate Mezzanine B Borrower and the indirect parent of each of the Debtors. Eastern Property brought a counterclaim and certain third-party claims against affiliates of Morgan Stanley in the Chancery Court. after expedited discovery and a hearing on the matter. and MSREF from foreclosing on the equity interests in the Corporate Mezzanine B Borrower. 2011. Eastern Property was a very junior stakeholder in the capital structure of the enterprise owning the Company at the time). Overall.
to seek the most advantageous postpetition financing terms. affiliates of Paulson have committed to provide a $30 million debtor-in-possession loan that would be junior and not seek to prime any of the liens of the Mortgage Loan. which may be necessary to fund working capital during the pendency of these cases. The Debtors believe that these chapter 11 cases will result in a successful restructuring of the Debtors’ balance sheet and business operations that will serve to maximize the value of the Debtors’ enterprise for the benefit of the Debtors’ estates and all stakeholders. on the Petition Date. the Debtors were not able to obtain an extension agreement with each of their lenders. to ensure a smooth transition and show renewed sponsorship in the assets. However. The Debtors intend to use the Paulson commitment as a “back-stop” while they continue.and Mezzanine Loans to allow the Debtors and these lenders to continue negotiations outside of chapter 11. The proceeds of the debtor-in- possession financing will be used to ensure payment of interest to the Mortgage lender and other administrative claims. In light of this circumstance. through their financial and legal advisors. 43. 44. Unfortunately. each of the Debtors filed a petition with the Court under chapter 11 of the Bankruptcy Code to provide the Debtors with the opportunity to restructure their debt in an orderly and value-maximizing manner under the auspices of a chapter 11 proceeding. Because of the limited time between the foreclosure and the impending maturity date of the Mortgage Loan and Mezzanine Loans. Discussion with these lenders continued over the days and nights immediately prior to the Petition Date. 21 . the Debtors have not had sufficient time to adequately canvass the market-place for debtor-in-possession financing.
A description of the relief requested and the facts supporting each of the First Day Pleadings is set forth below. will also ease the administrative burdens on the Court by allowing the Debtors’ cases to be administered as a single joint proceeding instead of 30 independent chapter 11 cases. Motion of MSR Resort Golf Course LLC. I believe that the relief requested in the Joint Administration Motion is in the best interests of the Debtors’ estates. et al. The Debtors request entry of an order directing the joint administration of these 46. applications. and all other parties in interest. of the motions.15 A. facilitate the efficient administration of these chapter 11 cases. if not most. under a single docket entry. Administrative and Procedural Motions.III. For example. 45. 22 . and other pleadings filed in these chapter 11 cases will relate to relief sought jointly by all of the Debtors. cases. and expedite a swift and smooth restructuring of the Debtors’ balance sheet. and will enable 15 Capitalized terms used but not defined in this section have the meanings ascribed them in the respective First Day Pleadings. virtually all of the relief sought by the Debtors in the First Day Pleadings is sought on behalf of all of the Debtors. 47. 1. for procedural purposes only. Joint administration of the Debtors’ chapter 11 cases. RELIEF SOUGHT IN THE DEBTORS’ FIRST DAY PLEADINGS Contemporaneously herewith. for procedural purposes only. their creditors. the Debtors have filed a number of First Day Pleadings in these chapter 11 cases seeking orders granting various forms of relief intended to stabilize the Debtors’ business operations. The Debtors believe that many. for the Entry of an Order Directing Joint Administration of Their Chapter 11 Cases (the “Joint Administration Motion”).. I believe that the relief requested in the First Day Pleadings is necessary to allow the Debtors to operate with minimal disruption during the pendency of these chapter 11 cases.
I respectfully submit that the Case Management Motion should be approved. will maximize the efficiency and orderly administration of these chapter 11 cases. I believe that the relief requested in the Case Management Motion is in the best interests of the Debtors’ estates. et al. and all other parties in interest. the Debtors believe that the Case Management Procedures will facilitate service of Court Papers in a manner that will be less burdensome and costly than serving such pleadings on every potentially interested party.the Debtors to continue to operate their businesses in chapter 11 without disruption. their creditors. on behalf of the Debtors. 49.. delivering. those associated with multiple hearings per month. I respectfully submit that the Joint Administration Motion should be approved. 23 . Case Management. Accordingly. for example. I also expect that numerous motions and applications will be filed in these chapter 11 cases. or otherwise serving paper copies of all such documents―could impose significant economic and administrative burdens on our estates and the Court. which. on behalf of the Debtors. 2. mailing. I expect there will be numerous parties in interest in these chapter 11 cases and 48. 50. and Administrative Procedures (the “Case Management Motion”). plus the costs associated with copying. in turn. The costs and burdens that might arise absent adoption of the proposed procedures―such as. and will enable the Debtors to continue to operate their businesses in chapter 11 without disruption. Motion of MSR Resort Golf Course LLC. Accordingly. for the Entry of an Order Establishing Certain Notice. anticipate that a significant number of parties will file requests for service of filings. Given the size and scope of these chapter 11 cases.
the Debtors believe it will maximize efficiency and accuracy and reduce costs to maintain electronic-format lists of creditors rather than preparing and filing separate matrices.S. Having the Claims Agent mail the Notice of Commencement relieves the Clerk of the Court and the U.. unless the Debtors file their schedules of assets and liabilities simultaneously with the petitions.S. 53. (b) authorizing the Debtors to file a consolidated list of the Debtors’ 30 largest unsecured creditors. the U. and (C) Mail Initial Notices (the “Creditor Matrix Motion”). Motion of MSR Resort Golf Course LLC. et al. (c) authorizing the Debtors to mail initial notices through their Proposed Claims Agent. for the Entry of an Order Authorizing the Debtors to (A) Prepare a List of Creditors in Lieu of Submitting a Formatted Mailing Matrix. Trustee of the administrative burden of providing notice to the Debtors’ creditors. Trustee. The Debtors propose that.3. The Debtors are also seeking to retain and employ Kurtzman Carson Consultants LLC as their notice and claims processing agent in these chapter 11 cases. or as required by the Bankruptcy Code. as soon as practicable after the Petition Date. (B) File a Consolidated List of the Debtors’ 30 Largest Unsecured Creditors. Because the Claims Agent will receive the consolidated list of creditors and mail the Notice of Commencement to the parties identified thereon. The Debtors request entry of an order authorizing the Debtors to prepare a 51. The Notice Rules require the Debtors to file a list of creditors and their addresses with their chapter 11 petitions. 24 . including the notice of commencement of these chapter 11 cases. The Debtors also request the Court’s approval to have the Claims Agent undertake all mailings directed by the Court. 52. the Debtors furnish their list of creditors to the Claims Agent so that the Claims Agent may assist with the consolidation of the Debtors’ computer records into a creditor database and (b) complete the mailing of notices to the parties in such database. consolidated list of creditors in lieu of submitting any required mailing matrix.
and statements of financial affairs (collectively the “Schedules and Statements”). should it become necessary. and will enable the Debtors to continue to operate their businesses in chapter 11 without disruption.. I believe that the relief requested in the Creditor Matrix Motion is in the best interests of the Debtors’ estates. their creditors. without prejudice to the Debtors’ ability to request additional time. Motion of MSR Resort Golf Course LLC. their creditors. and will enable the Debtors to continue to operate their businesses in chapter 11 without disruption. The Debtors request an additional thirty days to file their schedules of assets and 55. the Resort Managers and the Asset Manager must continue to operate while responding to the demands of the bankruptcy cases. and all other parties in interest. I believe that the relief requested in the Schedules Extension Motion is in the best interests of the Debtors’ estates. liabilities and contracts. The requested extension would give the Debtors a total of 44 days from the Petition Date to file their Schedules and Statements. Due to the complexity of the Debtors’ organizational structure. 25 . To prepare their Schedules and Statements. and Statements of Financial Affairs (the “Schedules Extension Motion”). 56. 57. the Debtors’ Asset Manager must engage closely with the Resort Managers to collect and review various records relating to a portfolio of five resorts. Accordingly. Schedules of Executory Contracts and Unexpired Leases. This task is further complicated by the fact that the Debtors. the Debtors anticipate that they will be unable to complete their Schedules and Statements in the 14 days provided under Bankruptcy Rule 1007(c). and all other parties in interest. the scope of their business and the diversity of their resort operations. on behalf of the Debtors.54. for the Entry of an Order Extending the Deadline to File Schedules of Assets and Liabilities. each of which has a sizeable number of assets. et al. schedules of executory contracts and unexpired leases. liabilities. I respectfully submit that the Creditor Matrix Motion should be approved. 4.
on behalf of the Debtors. The operation of the Debtors’ business requires that the cash management system continue to be implemented during the pendency of these chapter 11 cases. (b) ensuring the availability of funds when necessary. The Debtors seek (a) authorization for the continued use of: (i) the existing cash 58. Operational Motions. Requiring the Debtors to adopt an entirely new.Accordingly. 26 .. I am familiar with the Debtors’ cash management system. Motion of MSR Resort Golf Course LLC. and (b) granting such other relief as is just and proper. 59. and (iii) the existing business forms. and be extraordinarily disruptive to the operation of the resort business. and (C) Existing Business Forms (the “Cash Management Motion”). essential business practice providing significant benefits to the Debtors including. and (c) reducing costs and administrative expenses by facilitating the movement of funds and the development of timely and accurate account balance information. Any disruption of the cash management system could have a severe and adverse impact on the Debtors’ reorganization efforts and would undoubtedly affect the underlying value of the Debtors’ assets. 5. (ii) the existing bank accounts. The relief requested will help ensure the Debtors’ orderly entry into chapter 11 and avoid many of the possible disruptions and distractions that could divert the Debtors’ attention from more pressing matters during the initial days of these chapter 11 cases. management system. I respectfully submit that the Schedules Extension Motion should be approved. (B) Existing Bank Accounts. The Debtors also request an extension of time to comply with section 345(b) of the Bankruptcy Code. et al. create unnecessary administrative burdens. segmented cash management system would be expensive. B. for the Entry of Interim and Final Orders Authorizing the Continued Use of (A) Existing Cash Management System. The cash management system constitutes an ordinary course. (a) control corporate funds.
except as permitted in the order approving the Motion of MSR Resort Golf Course LLC. and to aid in the Debtors’ efforts to complete these cases successfully and without delay. 27 . the Debtors seek a waiver of the U. I believe that the relief requested in the Cash Management Motion is in the best interests of the Debtors’ estates. as well as on the overall value of the portfolio of Resorts. and all other parties in interest. continuation of the cash management system. is not only essential but in the best interests of all creditors and other parties in interest. Consequently. on behalf of the Debtors. 60.S. Any such disruption could have a severe and adverse impact upon the Debtors’ ability to reorganize. would cause great harm to Resort operations and would jeopardize the ability of the Debtors to collect and disburse funds in the ordinary course of their businesses. Trustee requirement that their bank accounts be closed and that new postpetition bank accounts be opened. I respectfully submit that the Cash Management Motion should be approved. it is important that the Debtors be permitted to continue to maintain their existing bank accounts.. The closing of the bank accounts. Granting Related Relief. Accordingly. To ensure as smooth a transition into chapter 11 as possible. their creditors. In addition. et al.The cash management system has seamlessly and efficiently operated to collect the revenue generated at the property levels and disburse such funds to operate the resorts’ business. 61. and Scheduling a Second Interim Hearing. even if for a brief period of time. for the Entry of Interim Order Authorizing Cash Collateral Use. to avoid delays in payment to administrative creditors. and will enable the Debtors to continue to operate their businesses in chapter 11 without disruption.
or affiliates thereof to the extent they pay Taxes and Fees that become due and payable during this time and will cause immediate and irreparable harm to their estates. conducting audits. non-Debtors on account of. the Debtors only will pay Taxes and Fees and reimburse non-Debtor affiliates. seeking to lift the automatic stay. but not limited to. honor. and pay. including. when the Debtors in their sole discretion so request. all of which would greatly disrupt the Debtors’ operations and ability to focus on their reorganization efforts. for the Entry of Interim and Final Orders Authorizing the Payment of Prepetition Taxes and Fees (the “Taxes and Fees Motion”).6. provided. I believe that the relief requested in the Taxes and Fees Motion is in the best interests of the Debtors’ estates. but not direction. and the costs and expenses incident thereto. however that in the first 21 days of these chapter 11 cases. process. 64. their creditors. 63. Taxes and Fees they incurred in the ordinary course of business. et al.. Motion of MSR Resort Golf Course LLC. or pursuing payment of the Taxes and Fees from the Debtors’ officers and directors. any checks drawn and electronic funds transfers requested on the Debtors’ Bank Accounts to pay the Taxes and Fees. and all other parties in interest. without regard to whether such obligations accrued or arose before or after the Petition Date. to pay. The Debtors also request that the Court authorize and direct the Banks. The Debtors’ failure to pay prepetition Taxes and Fees may cause the Authorities to take precipitous action. whether those transfers were presented prior to or after the Petition Date. to the extent of funds on deposit. preventing the Debtors from doing business in certain jurisdictions. the Management Companies. or reimburse 62. Payment of the Taxes and Fees is critical to the Debtors’ continued and uninterrupted operations. to receive. 28 . The Debtors seek the authority. filing liens. and will enable the Debtors to continue to operate their businesses in chapter 11 without disruption.
on behalf of the Debtors. Because satisfied customers are the most valuable assets of any hospitality business. I respectfully submit that the Taxes and Fees Motion should be approved. The Debtors seek authority to honor certain prepetition obligations and otherwise 65. and ultimately deliver the most value to all stakeholders in these chapter 11 cases. 7. the Debtors believe. which leads to repeat business. continue certain customer programs and practices in the ordinary course of business. 66. for the Entry of an Order Authorizing the Debtors to Honor Certain Prepetition Obligations to Customers and Otherwise Continue Certain Customer Programs and Practices in the Ordinary Course of Business (the “Customer Programs Motion”). et al. Any interruption or discontinuation of the Customer Programs risks the permanent loss of the respective Resort’s customers. Operating in a competitive service oriented industry. which would cause a dramatic reduction in revenue and immediate and irreparable harm to the Debtors’ business. the Debtors submit that it is essential that they be permitted to honor.Accordingly. Motion of MSR Resort Golf Course LLC. that they must promptly assure customers of their continued ability to satisfy obligations under the Customer Programs following the commencement of these chapter 11 cases. obligations related to their Customer Programs in accordance with their prepetition practices and customers’ expectations. The Customer Programs are integral to the Debtors’ efforts to stabilize their business.. and I agree. without interruption. restore profitability. and enhances their reputation. The filing of these chapter 11 cases may negatively affect customers’ attitudes and behavior toward the Debtors’ business and may erode goodwill and ongoing business relationships if customers perceive that the Debtors are unable or unwilling to fulfill the prepetition promises made through their Customer Programs at the Resorts. I am familiar with the Customer Programs. the Debtors rely on their customers’ satisfaction. In order to ensure continuing customer loyalty and a successful reorganization. The aggregate cost to the 29 .
Motion of MSR Resort Golf Course LLC. prepetition amounts outstanding. The Debtors seek an order (a) determining adequate assurance of payment for 68. to any requesting Utility Provider. I believe that the two week deposit. Accordingly. their creditors. 69. calculated based on the historical average over the past 12 months. The Debtors’ Resorts are dependent on electricity and gas for lighting. which will require that the Debtors provide a deposit in an amount equal to two weeks of Utility Service. heating. Uninterrupted Utility Services are essential to the ongoing operations of the Resorts and the overall success of these chapter 11 cases.. together with the Debtors’ demonstrated ability to pay for future Utility Services in the ordinary course of business. on behalf of the Debtors. provides more than adequate assurance of payment. et al. In addition. future utility services. 67. and all other parties in interest.Debtors to continue the Customer Programs and perform and honor prepetition obligations with respect thereto is insignificant when compared to the enormous detrimental impact their business would suffer if these programs are suspended or abandoned. or discontinuation of utility services. or the discrimination against the Debtors on account of the Debtors’ bankruptcy filing. and will enable the Debtors to continue to operate their businesses in chapter 11 without disruption. for the Entry of an Order Determining Adequate Assurance of Payment for Future Utility Services (the “Utility Motion”). 8. as more fully explained in the Utility Motion. (b) prohibiting the alteration. or any perceived inadequacy of the Debtors’ proposed adequate assurance. The Debtors seek approval of certain procedures. I respectfully submit that the Customer Programs Motion should be approved. and air conditioning. maintenance of telephone and other telecommunication and internet services is imperative because the Debtors’ 30 . I believe that the relief requested in the Customer Programs Motion is in the best interests of the Debtors’ estates. refusal.
to pay the prepetition Management Obligations in the ordinary course of business and to honor the postpetition obligations under the Management Agreements. Certain other Debtors lease the Resorts from. et al. Should any Utility Provider refuse or discontinue service. even for a brief period. and will enable the Debtors to continue to operate their businesses in chapter 11 without disruption. and other administrative functions. Motion of MSR Resort Golf Course LLC. among other things. 72. I respectfully submit that the Utility Motion should be approved. vendor communications. on behalf of the Debtors. room and entertainment reservations. 31 . buildings. customers and employees. but not the direction. and such disruption would jeopardize the Debtors’ ability to manage their reorganization efforts. for the Entry of an Order (A) Authorizing the Payment of Prepetition Amounts Under the Management Agreements and (B) Authorizing the Debtors to Honor Postpetition Obligations Under the Management Agreements (the “Management Agreement Motion”). and all other parties in interest. 70. Accordingly. sales. 71. Accordingly. sanitary lavatory facilities for Resort guests. and pay rent to. it is essential that the Utility Services continue uninterrupted during these chapter 11 cases. Continued water service is necessary to maintain.Resort Managers use these services to conduct all aspects of the Resorts’ day-to-day operations. the operations of the Resorts could be severely disrupted. I believe that the relief requested in the Utility Motion is in the best interests of the Debtors’ estates. including guest room telephone access. the Property-Owning Entities under certain lease agreements. Certain of the Debtors own the land. their creditors. The Resort Managers operate the Resorts pursuant to management agreements with the Tenant Entities. and improvements on the Resort properties..The Debtors seek the authority.
entering into contracts as necessary. and performing physical inspections of the Resorts. determine and implement all labor and personnel policies (including union negotiations in some cases). and reimbursements for out-of-pocket expenses incurred in connection with services provided to the Debtors pursuant to the Asset Management Agreement. Among other things. the Resort Managers oversee the day-to-day operations of the Resorts. Among other things. 75. In exchange for their services and pursuant to the Resort Management Agreements. the Asset Manager is responsible for completing and implementing operating budgets and business plans. Under the Resort Management Agreements. negotiating Resort Management Agreements. In exchange for services provided pursuant to the Asset Management Agreement. engaging professionals. capital expenditure oversight fees. the Resort Managers receive a monthly management fee and reimbursements for out-of-pocket expenses incurred in connection with services provided to the Debtors pursuant to the Resort Management Agreements. public relations and promotional policies. the Asset Manager receives a monthly management fee. credit policies. advertising. ensuring the Debtors’ compliance with the Resort Management Agreements and applicable law. collecting dues from the Resort Managers. advising the Debtors regarding pending claims. supervising the Resort Managers. entertainment policies. marketing. These fees are paid by a non-Debtor affiliate from proceeds of the Debtors’ operations. negotiate and enter into service contracts and licenses for Resort operations. the Resort Managers establish room rates. 74. 32 . proposing capital improvements to the Resorts.73. ensuring the maintenance of the Resorts. and establishing all sales. the Debtors’ assets are managed pursuant to an asset management agreement with the Asset Manager. under which the Asset Manager oversees the management and operation of the Resorts for the benefit of the Debtors. and food and beverage policies. In addition.
Failure to pay the Management Obligations may risk alienating the employees of the Management Companies who service the Resorts at a time when seamless operations are most important to the Debtors’ estates. the Debtors are seeking authority to 78. their creditors. will maximize the value of the Debtors’ estates for the benefit of their creditors and all parties in interest. on behalf of the Debtors. and the scope of tasks for which the Debtors will require the assistance of a Claims Agent. and in consideration of the number of anticipated claimants and parties in interest. the Debtors submit that the appointment of 33 . Any disturbance in the services of the Management Companies likely would have an immediate and direct effect on the Debtors’ operations and could irreparably tarnish the reputation of the Resorts. The Debtors have evaluated several potential candidates to serve as their claims and noticing agent (“Claims Agent”). Professional-Retention-Related Pleadings. Following that review. 9. Preservation of the relationship with the Management Companies. at the onset of these chapter 11 cases. C. employ and retain Kurtzman Carson Consultants as their notice and claims agent. Payment of the Management Obligations is necessary to ensure a smooth entry into chapter 11 and to preserve the value of the Debtors’ assets on a going-forward basis. for the Entry of an Order Authorizing the Employment and Retention of Kurtzman Carson Consultants LLC as Notice and Claims Agent (the “KCC Retention Application”). Motion of MSR Resort Golf Course LLC. Pursuant to the KCC Retention Application. I respectfully submit that the Management Agreement Motion should be approved. et al.76. the nature of the Debtors’ business. I believe that the relief requested in the Management Agreement Motion is in the best interests of the Debtors’ estates. Accordingly. and all other parties in interest and will enable the Debtors to continue to operate their businesses in chapter 11 without disruption.. 77.
The Debtors reserve all rights to assert that any debt or claim listed herein is a disputed claim or debt. nor is it binding on. and attorneys for. which I have provided in the exhibits attached hereto as Exhibit C through Exhibit N.Kurtzman Carson Consultants LLC as Claims Agent is both necessary and in the best interests of the Debtors’ estates. Based on KCC’s considerable experience in providing similar services in large chapter 11 cases. or status of any such claim or debt. Exhibit C hereto provides the names and addresses of the members of. these exhibits contain the following information with respect to the Debtors (on a consolidated basis). the descriptions in the corporate and legal documents shall control. 81. nature. In the event of any inconsistencies between the summaries set forth and the respective corporate and legal documents relating to such obligations. their creditors. 34 . any committee organized prior to the The information contained in the Exhibits attached to this Declaration shall not constitute an admission of liability by. amount. the Debtors. the Debtors believe that KCC is eminently qualified to serve as Claims Agent in these chapter 11 cases. 80. unless otherwise noted:16 • 16 Pursuant to Local Bankruptcy Rule 1007-2(a)(3). and all other parties in interest. creditors. IV. I have reviewed the terms of the engagement and believe that the Debtors’ estates. Specifically. The descriptions of the collateral securing the underlying obligations are intended only as brief summaries. and to challenge the priority. and will enable the Debtors to continue to operate their businesses in chapter 11 without disruption. A detailed description of the services that KCC has agreed to render and the compensation and other terms of the engagement are provided in the motion. Accordingly. parties in interest. on behalf of the Debtors. INFORMATION REQUIRED BY LOCAL BANKRUPTCY RULE 1007-2 Local Bankruptcy Rule 1007-2 requires certain information related to the Debtors. I believe that the relief requested in the KCC Retention Application is in the best interests of the Debtors’ estates. and this Court will benefit as a result of KCC’s experience and cost-effective methods. I respectfully submit that the KCC Retention Application should be approved. 79.
• Pursuant to Local Bankruptcy Rule 1007-2(a)(4). Exhibit H hereto provides a list of the property comprising the premises owned. leased or held under other arrangement from which the Debtors operate their business. assignee of rents. Pursuant to Local Bankruptcy Rule 1007-2(a)(9). Exhibit F hereto provides a summary of the Debtors’ assets and liabilities. pledge. if not included in the post office address). address (including the number. the address (including the number. or secured creditors. an estimate of the value of the collateral securing the claim. the name(s) of person(s) familiar with the Debtors’ account. excluding claims of insiders: the creditor’s name. against the Debtors or their property where a judgment or seizure of their property may be imminent. the telephone number. or suite number. and a brief description of the circumstances surrounding the formation of the committee and the date of the formation. mortgagee. a brief description of the claim. Pursuant to Local Bankruptcy Rule 1007-2(a)(5). Pursuant to Local Bankruptcy Rule 1007-2(a)(10). Pursuant to Local Bankruptcy Rule 1007-2(a)(8). the amount of the claim. Pursuant to Local Bankruptcy Rule 1007-2(a)(6). or agent for such entity: the name. Exhibit G hereto provides the following information with respect to any property in possession or custody of any custodian. Exhibit E hereto provides the following information with respect to each of the holders of the five largest secured claims against the Debtors: the creditor’s name. 1251 Avenue of the Americas. Pursuant to Local Bankruptcy Rule 1007-2(a)(7). Exhibit K hereto provides a list of the nature and present status of each action or proceeding. • • • • • • • 35 . location. located at c/o CNL-AB LLC. the nature and approximate amount of the claim. street. and telephone number of such entity and the court in which any proceeding relating thereto is pending. if not included in the post office address). Exhibit I hereto sets forth the location of the Debtors’ substantial assets. New York. unliquidated. pending or threatened. the location of their books and records. or partially secured. address. Pursuant to Local Bankruptcy Rule 1007-2(a)(11). street. and an indication of whether the claim is contingent. and zip code. and value of any assets held by the Debtors outside the territorial limits of the United States. apartment.order for relief in these chapter 11 cases. The Debtors maintain no offices but rather conduct business through third parties and affiliates out of the Company’s equity owners. and an indication of whether the claim or lien is disputed at this time. and zip code. New York 10036. disputed. and the nature. Exhibit J attached hereto provides information on the Debtors’ outstanding publicly held securities. Exhibit D hereto provides the following information with respect to each of the holders of the Debtors’ thirty (30) largest unsecured claims. public officer. apartment. or suite number.
Exhibit N hereto provides a schedule. Pursuant to Local Bankruptcy Rule 1007-2(b)(3). obligations and receivables expected to accrue but remain unpaid. other than professional fees. directors. and financial and business consultants retained by the Debtors. for the 30-day period following the Petition Date. for the 30-day period following the filing of these chapter 11 cases.• Pursuant to Local Bankruptcy Rule 1007-2(a)(12). Pursuant to Local Bankruptcy Rule 1007-2(b)(1)-(2)(A). equityholders. and equityholders) and the estimated amounts to be paid to officers. Exhibit M hereto provides the estimated amount of payroll to the Debtors’ employees (not including officers. of estimated cash receipts and disbursements. and any other information relevant to an understanding of the foregoing. • • 36 . for the 30-day period following the Petition Date. net cash gain or loss. their tenure with the Debtors. Exhibit L hereto sets forth a list of the names of the individuals who comprise the Debtors’ existing senior management. directors. and a brief summary of their relevant responsibilities and experience.
C. . et al. Dated: February 1. /s/ Daniel Kamensky Daniel Kamensky Secretary and Treasurer. § 1746. I declare under penalty of perjury that the foregoing is true and correct.Pursuant to 28 U. 2011 Respectfully submitted. MSR Resort Golf Course LLC.S.
EXHIBIT A Debtors’ Corporate Structure Chart .
LLC 100% 100% MSR Hotels & Resorts. Inc. LLC 100% MS Resorts I. LLC 100% MS Resorts II.ORGANIZATIONAL CHART 1 LEGEND Non-Debtor Subsidiary Debtor Subsidiary Seeking Relief Under Chapter 11 CNL-AB LLC 100% MS Resorts III. MS Resort Purchaser LLC To: Organizational Chart 2 To: Organizational Chart 3 .
LP . LLC 0. Debtor Subsidiary Seeking Relief Under Chapter 11 99% 100% 100% MSR Hospitality LP Corp. LLC 0. LP MSR Desert Resort.1% GP 0. LP MSR Resort Intermediate MREP. LLC 0.9% LP MSR Resort Senior Mezz. LLC 0. Inc. Inc. MSR Hospitality GP Corp.9% LP 100% 100% MSR Resort Sub Intermediate Mezz. LLC 0. Inc.9% LP 100% 100% MSR Resort Recreation.1% GP 0.1% GP MSR Biltmore Resort.9% LP MSR Resort SPE GP II. LLC MSR Resort Sub Senior Mezz GP.1% GP 99.9% LP 0. LP MSR Resort Junior MREP. LP MSR Grand Wailea Resort. LP 20% GP 100% 100% 100% 99.9% LP 99. LP MSR Resort Senior MREP. LLC MSR Resort Holdings GP. LLC MSR Resort Hospitality GP. Inc.1% GP 99. 100% MSR Resort Sub Senior Mezz. LLC 0.ORGANIZATIONAL CHART 2 LEGEND To: Organizational Chart 1 Non-Debtor Subsidiary MSR Hotels & Resorts.1% GP 99.9% LP 100% 100% MSR Resort Sub Junior Mezz.9% LP 100% 100% MSR Resort Intermediate Mezz. LLC 0. LLC MSR Resort Intermediate Mezz GP. LP MSR Resort Sub Intermediate MREP. LLC MSR Resort Junior Mezz GP.9% LP MSR Resort Lodging Tenant.1% GP 99. LLC MSR Resort Sub Junior Mezz GP. 1% MSR Hospitality Partners.1% GP 99. 100% MSR Resort Desert Real Estate. 80% LP MSR Hospitality Services. LLC MSR Resort Sub Intermediate Mezz GP.1% GP 99. LP MSR Resort Senior Mezz GP. LLC MSR Resort Ancillary Tenant.9% LP 100% 100% MSR Resort Junior Mezz.1% GP 100% 100% MSR Resort Hospitality.1% GP 99. LP MSR Resort Sub Senior MREP. LP 100% 99.9% LP 100% MSR Resort Biltmore Real Estate. LLC 99. LP MSR Resort REP. LLC 0.
LP 100% MSR Claremont Resort.9% LP MSR Resort Golf Course LLC MSR Resort Silver Properties.ORGANIZATIONAL CHART 3 To: Organizational Chart 1 LEGEND Non-Debtor Subsidiary Debtor Subsidiary Seeking Relief Under Chapter 11 MS Resort Purchaser LLC 100% MSR Resort Junior Mezz LLC 100% MSR Resort Sub Intermediate Mezz LLC 100% MSR Resort Intermediate Mezz LLC 100% MSR Resort Sub Senior Mezz LLC 100% MSR Resort Senior Mezz LLC 100% 99.1% GP MSR Resort Hotel.9% LP 0. LP 0.1% GP 99.9% LP MSR Resort SPE GP LLC 99. LP .1% GP 0.
. LLC (a/k/a Hilton Worldwide Association) La Quinta MSR Desert Resort. Resort Manager 90210 Management Company. including the Property Owning Entity and Tenant Entity specific to each Resort. and MSR Resort Ancillary Tenant Corp. LLC (a/k/a Hilton Worldwide Association) 90210 Management Company. LP Tenant Entity MSR Resort Lodging Tenant Corp. LP MSR Resort Lodging Tenant Corp. Name of Resort Arizona Biltmore Property Owning Entity MSR Biltmore Resort.P. Grand Wailea MSR Resort Lodging Tenant Corp 90210 Management Company. Doral MSR Resort Hotel. LLC (a/k/a Hilton Worldwide Association) Pyramid Acquisition II Management L. LP MSR Grand Wailea Resort. Marriott International. Claremont MSR Claremont Resort.EXHIBIT B List of Debtors’ Resorts The following is a list of the Debtors’ Resorts. LP MSR Resort Lodging Tenant Corp. Inc. LP MSR Resort Lodging Tenant Corp. and the Resort Manager. LP and MSR Resort Silver Properties.
.EXHIBIT C Informal Committees Organized Prior to the Order for Relief There were no informal committees organized prior to the order for relief in the Debtors’ chapter 11 cases.
Illinois Tel: 312-294-6801 Fax: 312-431-6940 Attn: Tim Benolken Miller Buckfire 601 Lexington Avenue 22nd Floor New York. trade debt. In the event of any inconsistencies between the summaries set forth below and the respective corporate and legal documents relating to such obligations. Bremer Marriott International Manager of Global Finance Services 10400 Fernwood Road Bethesda. DISPUTED. amount.30 3. and to challenge the priority. etc. unless the value of the collateral is such that the unsecured deficiency places the creditor among the holders of the thirty 30 largest unsecured claims. nor is it binding on. the following is a consolidated list of the Debtors’ creditors holding the thirty (30) largest unsecured claims (the “Consolidated Creditor List”) based on the Debtors’ unaudited books and records as of the petition date. UNLIQUIDATED. the descriptions in the corporate and legal documents shall control. also state value of security) 1. Contract Unliquidated $7.541. government contracts. Contract Contingent Unliquidated Disputed $8. The Debtors reserve all rights to assert that any debt or claim included herein is a disputed claim or debt. COMPLETE MAILING ADDRESS. OR SUBJECT TO SETOFF AMOUNT OF CLAIM (if secured.067.82 2. New York 10022 Tel: 212-895-1868 Fax: 212-895-1862 Attn: Steven W.447. bank loan. NAME OF CREDITOR. AND EMPLOYEE.290. AGENT.) INDICATE IF CLAIM IS CONTINGENT. OR DEPARTMENT OF CREDITOR FAMILIAR WITH CLAIM NATURE OF CLAIM (bond debt. Hilton Hotels Corporation c/o Hilton Chicago 720 South Michigan Avenue Chicago. or status of any such claim or debt. nature.EXHIBIT D Consolidated List of the Holders of the Debtors’ 30 Largest Unsecured Claims Pursuant to Local Bankruptcy Rule 1007-2(a)(4). The Consolidated Creditor List has been prepared in accordance with Bankruptcy Rule 1007(d) and does not include (i) persons who come within the definition of “insider” set forth in section 101(31) of the Bankruptcy Code or (ii) secured creditors. The information contained herein shall not constitute an admission of liability by.063.00 . the Debtors.401. Maryland 20817 Tel: 301-380-2353 Fax: 301-380-3967 Attn: Nathan Jones Contract Unliquidated $13.
) INDICATE IF CLAIM IS CONTINGENT.00 6. Ferraro Crowne Point Partners.000. Contract Contingent Unliquidated Disputed $1.NAME OF CREDITOR.66 5. LLC 55 Farmington Avenue Suite 501 Hartford. AND EMPLOYEE. Michigan 49355-0001 Tel: 616-787-7684 Fax: 616-787-5537 Attn: Pam Huver Kerry William Rose & Elizabeth Erene Evers-Rose 2626 East Arizona Biltmore Circle.831. UNLIQUIDATED.400. DISPUTED.750.84 7.00 2 .000. OR DEPARTMENT OF CREDITOR FAMILIAR WITH CLAIM NATURE OF CLAIM (bond debt. Oregon 97224 Tel: 503-670-9300 Fax: 503-670-9400 Attn: Mark E. LLC 17700 SW Upper Boones Ferry Road Suite 100 Portland. OR SUBJECT TO SETOFF AMOUNT OF CLAIM (if secured. One Post Office Square Suite 3100 Boston.P. Connecticut 06105 Tel: 860-547-6455 Fax: 866-879-4777 Attn: Jason A. also state value of security) 4. Rockwell Amway 7575 Fulton Street East Mailcode 77-3 D Ada.456.500. Specialty Risk Services. COMPLETE MAILING ADDRESS. AGENT. bank loan. trade debt. etc. Unit #7 Phoenix. Contract Unliquidated $1.336. Massachusetts 02109 Tel: 617-412-2815 Fax: 617-412-2855 Attn: Christopher Devine Insurance Unliquidated $4. government contracts.241. Advance Deposit Unliquidated $1. Arizona 85016 Tel: 602-321-9242 Fax: 602-224-0805 Attn: Kerry William Rose & Elizabeth Erene Evers-Rose Pyramid Acquisition II Management L. Membership Deposit Unliquidated $1.00 8.388.
Advance Deposit Unliquidated $1.O.672. government contracts. Arkansas 72116 Tel: 501-791-4200 Fax: 501-491-4202 Attn: Sharon Ferguson Arizona Biltmore Hotel Villas Condominiums Association P. Trade Unliquidated $980. bank loan. Arizona 85069-9242 Tel: 602-263-7772 Fax: 602-246-6674 Attn: Morrison Group. 2365 Industrial Parkway West Hayward. Box 29063 Phoenix. and Belfor USA Group. COMPLETE MAILING ADDRESS. Box 39242 Phoenix. Inc.612. California Tel: 510-887-9106 Fax: 510-887-9110 Attn: Tony Fowler Contract Unliquidated $915. OR SUBJECT TO SETOFF AMOUNT OF CLAIM (if secured.012. Inc.00 12.) INDICATE IF CLAIM IS CONTINGENT. Contract Contingent Unliquidated Disputed $1.178.49 11.500. Arizona 85085 Tel: 623-434-4333 Fax: 623-434-1515 Attn: Warren Lindell Trade Unliquidated $1. Inc. JPMorgan Chase P.00 13.O. UNLIQUIDATED. 20th Drive Suite 2 Phoenix. also state value of security) 9.NAME OF CREDITOR. AGENT. etc. trade debt.312.48 10. MS Resort Holdings LLC 1585 Broadway 37th Floor New York.45 3 . New York Tel: 212-761-4437 Fax: 212-761-0086 Attn: Vineet Sekhsaria Wyndham Worldwide 3700 Fox Hill Road North Little Rock. DISPUTED. Arizona 85038-9063 Tel: 212-270-6000 Fax: 212-270-1648 Attn: Legal Department Belfor USA Group. OR DEPARTMENT OF CREDITOR FAMILIAR WITH CLAIM NATURE OF CLAIM (bond debt.127. AND EMPLOYEE.824. 23610 N.
AGENT.079. Trade Unliquidated $613. etc.69 16. California 92614 Tel: 949-474-2001 Fax: 949-474-1534 Attn: William Wilhem In-N-Out Burger 4199 Campus Drive Suite 900 Irvine. Swank Audio Visuals.NAME OF CREDITOR. Illinois 60674 Tel: 636-680-2815 Fax: 636-680-2865 Attn: Sandy Spencer Wailea MF-9 Associates 411 Huku Li’i Place Suite 204 Kihei. OR DEPARTMENT OF CREDITOR FAMILIAR WITH CLAIM NATURE OF CLAIM (bond debt.000.000.00 18.79 15. also state value of security) 14. bank loan. Advance Deposit Unliquidated $836. OR SUBJECT TO SETOFF AMOUNT OF CLAIM (if secured. Todd.572. COMPLETE MAILING ADDRESS.75 19. government contracts.004. Esq.67 4 . trade debt. UNLIQUIDATED. Membership Deposit Unliquidated $625. Contract Unliquidated $567. Insurance Unliquidated $692.248. Oregon 97204 Tel: 503-243-2035 Fax: 503-243-6307 Attn: Richard W. Illinois 60674 Tel: 847-413-5598 Fax: 877-962-2567 Attn: Dawn Schumacher Borrego Resort Holdings c/o Bertoni & Todd 430 Pacific Building 520 Southwest Yamhill Street Portland. Hawaii 96753 Tel: 808-891-8362 Fax: 808-891-8364 Attn: Martin Quill Contract Unliquidated $911. RD Olson Construction. DISPUTED. LP 2955 Main Street 3rd Floor Irvine.) INDICATE IF CLAIM IS CONTINGENT. AND EMPLOYEE.00 17. California 92612 Tel: 949-509-6347 Fax: 949-509-6394 Attn: Mary Ann Kelley Zurich North America 8734 Paysphere Circle Chicago. LLC 4037 Paysphere Circle Chicago.
Desert Elite 78-401 – Highway 111 Suite G La Quinta, California 92253-2066 Tel: 760-777-9920 Fax: 760-777-9918 Attn: Rancho Santana Account Department Of Water Supply 200 South High Street Wailuku, Hawaii 96793-2155 Tel: 808-270-7730 Fax: 808-270-7951 Attn: Dave Taylor Gibson Dunn & Crutcher 333 South Grand Avenue Los Angeles, California 90071 Tel: 213-229-7465 Fax: 213-229-7520 Attn: Legal Department T&G Constructors Inc 8623 Commodity Circle Orlando, Florida 32819 Tel: 407-352-4443 Fax: 407-357-6678 Attn: David Grabosky Consolidated Supply c/o The GRA Group 1399 Lear Industrial Parkway Avon, Ohio 44011 Tel: 440-328-8587 Fax: 440-937-5187 Attn: John Rich Hospitality Staffing Solutions LLC 100 Glenridge Point Parkway Suite 400 Atlanta, Georgia 30342 Tel: 770-612-0054 Fax: 770-612-2675 Attn: Legal Department
$448,357.40
$379,303.80
$344,037.44
$320,005.45
$312,866.35
Liberty Mutual 175 Berkeley Street Boston, Massachusetts 02116 Tel: 617-357-9500 Fax: 617-350-7648 Attn: Kelly Bishop Cub Cadet c/o Navis, Inc. 31029 Center Ridge Road Cleveland, Ohio 44145 Tel: 440-899-0299 Fax: 440-899-0399 Attn: Linda Pratt Teodoro Obiang 3620 Sweetwater Mesa Road Malibu, California 90264 Tel: 310-919-4279 Fax: 310-317-9752 Attn: Teodoro Obiang Craftsman Homes, Inc. 1157 N Red Gum Street Anaheim, California 92806 Tel: 714-630-7685 Fax: 714-630-7683 Attn: Scott N. Shaddix Pyramid Project Management One Post Office Square Suite 3100 Boston, Massachusetts 02109 Tel: 617-412-2815 Fax: 617-412-2855 Attn: Christopher Devine
$297,099.29
$286,945.65
$262,229.32
EXHIBIT E Consolidated List of the Holders of the Debtors’ Five Largest Secured Claims Pursuant to Local Bankruptcy Rule 1007-2(a)(5), the following is a list of creditors holding the five largest secured claims against the Debtors, on a consolidated basis, as of the Petition Date. The information contained herein shall not constitute an admission of liability by, nor is it binding on, the Debtors. The Debtors reserve all rights to assert that any debt or claim included herein is a disputed claim or debt, and to challenge the priority, nature, amount, or status of any such claim or debt. The descriptions of the collateral securing the underlying obligations are intended only as brief summaries. In the event of any inconsistencies between the summaries set forth below and the respective corporate and legal documents relating to such obligations, the descriptions in the corporate and legal documents shall control.
Creditor Name and Address Midland Loan Services, Inc. 10851 Mastin, 6th Floor Overland Park, KS 66210 Attn: Kevin S. Semon C Hotel Mezz Private Limited (f/k/a RE NA Investments Private Limited) 156 West 56th Street Suite 1900 New York, NY 10019 Attn: Anoop Varghese Metropolitan Life Insurance Company Los Angeles Regional Office 333 S. Hope Street, Suite 3650 Los Angeles, CA 90071 Attn: Mark Fritz 450 Lex Private Limited 156 West 56th Street Suite 1900 New York, NY 10019 Attn: Anoop Varghese Five Mile Capital SPE B LLC Three Stamford Plaza 301 Tresser Blvd., 9th Floor Stamford, CT 06901 Attn: Jim Glasgow Amount of Claim $1 billion Collateral Description and Value
Real property, value undetermined
Equity interests in direct Debtor-subsidiary, value undetermined
The Debtors reserve all rights to assert that any debt or claim included herein is a disputed claim or debt. or status of any such claim or debt.9 billion 2 . The following financial data is the latest available information and reflects the Debtors’ financial condition. nor is it binding on. the following are estimates of the Debtors’ total assets and liabilities on a consolidated basis. The information contained herein shall not constitute an admission of liability by. Assets and Liabilities Total Assets (Book Value) Total Liabilities Amount $2.2 billion $1. and to challenge the priority. as consolidated with its affiliated Debtors and non-Debtors as of the Petition Date.EXHIBIT F Summary of the Debtors’ Assets and Liabilities Pursuant to Local Bankruptcy Rule 1007-2(a)(6). the Debtors. nature. amount.
secured creditor.000 liquor deposit Arizona Biltmore N/A $1.000 liquor deposit . AZ 85034 Tel: (602) 346-5650 Valley of the Sun Wines P. The following chart lists the Debtors’ property held by third parties as determined after a reasonable inquiry. & Telephone Number (if Available) of Person or Entity in Possession of the Property Specialty Risk Persons P. Name. Address. AZ 85038-9165 Tel: (800) 507-5754 Quench Fine Wines 21241 N. assignee of rents. mortgagees. public officer. AZ 85027 Tel: (623) 587-0427 Location of Court Proceeding (if Applicable) Location of Debtors’ Property Summary of Property Arizona Biltmore N/A $12. pledges.000 liquor deposit Arizona Biltmore N/A $1. assignees of rents.618 deposit for potential losses on open workers compensation and general liability insurance claims Arizona Biltmore N/A $4. public officers.000 liquor deposit Arizona Biltmore N/A $7. common carriers. custodians. Through these arrangements. providing a comprehensive list of the persons or entities in possession of the property. as of the Petition Date. and the location of any court proceeding affecting such property would be impractical if not impossible. Phoenix. the Debtors’ ownership interest is not affected. Box 29165 Phoenix. Box 415753 Boston. mortgagee. In light of the movement of this property.O. the following lists the Debtors’ property. AZ 85031 Tel: (602) 264-1635 Crescent Crown 402 S. Suite 21 Phoenix. 54th Place Phoenix. shippers. Certain property of the Debtors is likely to be in the possession of various other persons. pledge. 45th Ave. 23rd Ave. their addresses and telephone numbers. MA 02241-5753 Tel: (888) 346-3119 Hensley & Co. secured creditors. that is in the possession or custody of any custodian. or agents. 4201 N.O. or agent for any such entity. including maintenance providers. materialmen.EXHIBIT G Summary of Debtors’ Property Held by Third Parties Pursuant to Local Rule 1007-2(a)(8).
500 liquor deposit Arizona Biltmore N/A $1. MI 49503 Tel: (616) 774-0561 Location of Court Proceeding (if Applicable) Summary of Property Arizona Biltmore N/A $30. AZ 85027 Edca Contractors.Location of Debtors’ Property Name. AZ 85043 Tel: (602) 353-6999 Young’s Market of AZ 500 S.850 liquor deposit Arizona Biltmore N/A $19. Suite 10 Phoenix. CA 90013 Tel: (866) 215-2477 Lanmor Services 21240 N. FL 33014 Attn: Alfredo Llop Tel: (786) 282-0008 Grand Rapids Chair Company 625 Chestnut SW Grand Rapids. Los Angeles.700 liquor deposit Arizona Biltmore N/A $8. Phoenix.939 deposit for capital project Doral N/A Deposit for 50% of spa patio Doral N/A Deposit for 50% of chairs 2 . 15th Lane Suite #114 Phoenix. 45th Ave. Address. 47th Ave.000 liquor deposit Arizona Biltmore N/A $2. Inc. AZ 85027 Tel: (623) 581-8081 Republic National Distributing 624 N. Phoenix. AZ 85043 Tel: (480) 921-8390 Quail Distributing 21241 N. 23rd Ave. 6446 Windmill Gate Road Miami Lakes. & Telephone Number (if Available) of Person or Entity in Possession of the Property Alliance Beverage 1115 N.000 liquor deposit Arizona Biltmore N/A $30. Phoenix. AZ 85043-1801 Tel: (602) 760-5500 Southern Wine & Spirits 2375 S. 44th St. Central Ave.
Box 415753 Boston. HI 96784 Osaki Creative Group 2120 Sixth St #7 Berkley.333 deposit for branding consultant .887 deposit for capital project Grand Wailea N/A $20. CA 92253 Attn: Wells L.Kincha Restaurant Grand Wailea N/A $274.000 rent deposit for space lease 3 .182 deposit for doors for Bistro Molokini Grand Wailea N/A $9. HI 96753 Maui Garage Doors. Address. HI Tel: (808) 486-0433 Haleakala Plumbing. HI 96793 Island Wide Natural Stone & Tile.000 deposit for grease removal project Grand Wailea N/A $22.000 deposit for capital project Grand Wailea N/A $5. Inc. P O Box 786 Puunene. LLC 78-080 Calle Estado La Quinta. MA 02241-5753 Tel: (888) 346-3119 Mitsubishi Electric: Bert Yorita Elevator Division Honolulu. Inc.553 of elevator parts held in separate warehouse in Maui Grand Wailea N/A $100. LA 21684 Pasadena. CA 91185 Old Town La Quinta.724 deposit for elevator modernization project La Quinta N/A $5. CA 94710 Otis Elevator Company Dept. Inc. Marvin Tel: (760) 771-2567 Location of Court Proceeding (if Applicable) Summary of Property Grand Wailea N/A $36. HI 96784 Interior Design Solutions 34 Naniluana Place Wailuku.474 deposit for potential losses on open workers compensation and general liability insurance claims Grand Wailea N/A $22. 1787 Halama Street Kihei.O. & Telephone Number (if Available) of Person or Entity in Possession of the Property Specialty Risk Persons P. P O Box 71 Puunene.Location of Debtors’ Property Name.
CT 06115 Attn: Jason A.245 deposit for potential losses on open workers compensation and general liability insurance claims La Quinta N/A $19. Address. CA 91756 Attn: Scott Ackley Tel: (909) 335-3972 PNC Financial Services USX Tower 600 Grant Street Pittsburgh.O. Ferraro Tel: (860) 547-6455 Southern California Gas Company P. Box C Monterey Park.Location of Debtors’ Property Name.907 utility deposit N/A N/A Midland cash management bank lender controlled lockbox 4 . & Telephone Number (if Available) of Person or Entity in Possession of the Property Specialty Risk Services LLC 690 Asylum Ave T-19 Hartford. PA 15219 Location of Court Proceeding (if Applicable) Summary of Property La Quinta N/A $68.
CA 92253 Riverside County Real Estate Office / Leasing 50-200 Avenida Vista Bonita La Quinta. La Quinta. FL 33178 Miami-Dade County La Quinta Resort & Club 49-499 Eisenhower Dr. HI 96753 Maui County Doral Golf Resort and Spa 4400 NW 87th Ave Miami. Maui. leased. CA 92253 Riverside County PGA West Private Clubhouse 55-955 PGA Boulevard La Quinta. the following lists the location of the premises owned. or held under other arrangement from which the Debtors operate their businesses as of the Petition Date. CA 92253 Riverside County Owned or Leased Owned Owned Owned Owned Owned Owned Owned Owned Owned . CA 92253 Riverside County Citrus Clubhouse 50-503 Mandarina La Quinta. CA 92253 Riverside County Mountain & Dunes Clubhouse 50-200 Avenida Vista Bonita La Quinta. Debtors’ Premises and Address Grand Wailea 3850 Wailea Alanui Wailea. FL 33178 Miami-Dade County The Spa at Doral 8755 NW 36 Street Doral. FL 33178 Miami-Dade County Jim McLean Signature Course 5001 NW 104 Avenue Doral.EXHIBIT H Summary of Debtors’ Property From Which the Debtors’ Operate Their Business Pursuant to Local Bankruptcy Rule 1007-2(a)(9).
AZ 86016 Maricopa County The Claremont Hotel Club & Spa 41 Tunnell Road Berkeley.Debtors’ Premises and Address PGA Tournament Clubhouse 56-150 PGA Boulevard La Quinta. Missouri Phoenix. CA 92253 Riverside County Arizona Biltmore 2400 E. CA 94705 Alameda County Owned or Leased Owned Owned Owned Owned 2 . CA 92253 Riverside County Greg Norman Clubhouse 81-405 Kingston Heath La Quinta.
. Debtors’ Assets Debtors’ Substantial Assets Debtors’ Books and Records Location See Exhibit H . NY 10020 Debtors’ Assets Outside the United States N/A. books and records. Pyramid Resort Asset Management One Post Office Square Suite 3100 Boston. and value of any assets held by the Debtors outside the territorial limits of the United States as of the Petition Date. TN 37777 The Debtors: c/o CNL-AB LLC 1251 Avenue of the Americas New York. and the nature. and Nature and Location of Debtors’ Assets Outside the United States Pursuant to Local Bankruptcy Rule 1007-2(a)(10).Owned and Leased Property.EXHIBIT I Location of the Debtors’ Substantial Assets. MA 02109 Marriot Business Services 1965 Marriott Drive Louisville. the following provides the location of the Debtors’ substantial assets.Owned and Leased Property. The Debtor has no assets outside the United States. location. Books and Records. See Exhibit H .
debentures. and the number of holders thereof as if the Petition Date. The Debtors’ directors and officers do not own any shares of publicly-held securities of the debtors. debentures. the following lists the number and classes of shares of stock. or other securities of the Debtors that are publicly held. or other securities of the Debtors that are publicly held.EXHIBIT J Summary of the Publicly Held Securities of the Debtors Pursuant to Local Bankruptcy Rule 1007-2(a)(7). There are no shares of stock. .
State of Florida Challenge to comprehensive plan . LP Rasham Nassar Discrimination complaint Hawaii wage-hour statute EPLI complaint Food borne illness Personal injury litigation Personal injury litigation Personal injury litigation MSR Grand Wailea Resort. LP Potential Counterparty Kerry William Rose and Elizabeth Erene Evers-Rose The Arizona Biltmore Villas Condominium Association David E. Jr. will be supplemented in the corresponding schedules to be filed by the Debtors in these chapter 11 cases. Nelson and Barbara J. LP MSR Biltmore Resort. This list reflects actions or proceedings considered material by the Debtors and. LP Aliya Bethea & Rodolphus Bethea. discrimination damages and attorney fee settlement negotiations ongoing Pending Pending Court decision issued Pending Pending Pending Settled Trial postponed MSR Claremont Resort. LP City of Doral. LP (potential defendant) MSR Claremont Resort. if necessary. LLC Barbara Jacobson Molly Maxey & Clarence Maxey Julie Hilty MSR Grand Wailea Resort. MSR Grand Wailea Resort. LP Chesebro MSR Resort Lodging Tenant. LLC MSR Resort Lodging Tenant. Debtor Entity MSR Biltmore Resort. et al. MSR Resort Hotel. Nelson Jean Riker and Anna Allen Nature of the Action (Claim Amount) Specific performance of real estate sale contract Land dispute Personal injury litigation Alleged violations of Americans with Disabilities Act Status Pending Pending Potential suit. LLC MSR Resort Lodging Tenant. the following lists material actions and proceedings pending or threatened against the Debtors or their properties where a judgment against the Debtors or a seizure of their property may be imminent as of the Petition Date. LP MSR Claremont Resort. no service Consent decree executed November 2010. LP Nan Wadsworth.EXHIBIT K Summary of Legal Actions Against the Debtors Pursuant to Local Bankruptcy Rule 1007-2(a)(11).
Mr. Name / Position Michael Barr President Relevant Experience / Responsibility Tenure Michael Barr is the Portfolio Manager of the Paulson Real Estate Appointed Recovery Fund. Mr. Daniel Kamensky Secretary and Treasurer Jonathan Shumaker Vice President . Shumaker is a graduate of Cornell University and Harvard Business School. Kamensky Appointed formerly was a Senior Vice President at Barclays Capital and Lehman 1/31/2011. Mr. Inc. the following provides the names of the individuals who constitute the Debtors’ existing senior management. Appointed Shumaker formerly was a Vice President of Real Estate Private 1/31/2011. Inc. a Managing Director of Real Estate Private Equity at Lehman Brothers. and a brief summary of their responsibilities and relevant experience as of the Petition Date. Mr. Inc. Mr. Barr formerly was 1/31/2011. Mr. Barr has worked exclusively in real estate since 1992 when he started at Merrill Lynch Real Estate Investment Banking after graduating from the University of Wisconsin. Brothers. a fund of Paulson & Co. Daniel Kamensky is a Partner at Paulson & Co. Equity at Lehman Brothers.EXHIBIT L Debtors’ Senior Management Pursuant to Local Bankruptcy Rule 1007-2(a)(12). Kamensky also worked as an attorney at Simpson Thacher & Bartlett LLP and holds law and undergraduate degrees from Georgetown University. Jonathan Shumaker is a Vice President at Paulson & Co. their tenure with the Debtors.
Accordingly. . stockholders. the Debtors have no payroll expenses. and Directors Payments to Financial and Business Consultants Payment Amount1 $0 $0 $0 1 Payment amount for the 30 day period following the filing of the Debtors’ chapter 11 petitions. the Debtors have no employees and generally do not participate in management and operational activities regarding the Resorts. and the amount paid or proposed to be paid to financial and business consultants retained by Debtors. for the 30-day period following the Petition Date. Stockholders. and directors. and Stockholders) Payments to Officers. and stockholders). the estimated amount of weekly payroll to the Debtors’ employees (exclusive of officers. the estimated amount paid and proposed to be paid to officers. corporate or portfolio management is undertaken by the Asset Manager. Payments Payments to Employees (Not Including Officers.EXHIBIT M Debtors’ Payroll for the Thirty (30) Day Period Following the Filing of the Debtors’ Chapter 11 Petitions Pursuant to Local Rules 1007-2(b)(1)-(2)(A) and (C). directors. As described herein. Resort-level staffing is managed by the Resort Managers at the individual Resorts. Directors. the following provides.
EXHIBIT N Debtors’ Estimated Cash Receipts and Disbursements for the Thirty (30) Day Period Following the Filing of the Chapter 11 Petitions Pursuant to Local Rule 1007-2(b)(3). net cash gain or loss.603.200. the Debtors’ estimated cash receipts and disbursements. Type Cash Receipts Cash Disbursements Net Cash Gain/Loss Unpaid Obligations (excluding professional fees) Unpaid Receivables (excluding professional fees) Amount $45.300. other than professional fees. for the 30-day period following the Petition Date. and obligations and receivables expected to accrue that remain unpaid.000 $6. the following provides.956.000 $244.000 $44.000 $16.000 .
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