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Promontory and Lien Holders Reach Agreement for Reorganization
On February 9, 2009, Promontory's operating companies, its secured lenders and the Promontory Unsecured Creditors Committee (comprised of Promontory Members and Owners and other unsecured creditors) reached agreement on a joint plan of reorganization for Promontory. This plan sets the stage for the resolution of the involuntary Chapter 11 bankruptcy proceedings brought against Promontory by a group of its second lien lenders last March.
The plan provides for the first lien lender group headed by Credit Suisse to form a new entity that will take ownership of Promontory's operating companies, subject to Credit Suisse's arrangement of exit financing. This plan, if approved by the Bankruptcy Court, could allow Promontory to emerge from bankruptcy as soon as the end of March, 2009.
Since commencing sales in 2002, Promontory has played an important role in the Park City real estate market, representing an average of 13% of the total single family home and vacant lot sales in the combined Park City/Snyderville Basin area. With its emergence from Chapter 11 with a clean bill of financial health - just as the government's economic stimulus package is poised to take hold - Promontory expects to recapture its leading market position. Rich Sonntag, Promontory's Managing Director, stated, "The reorganization will leave Promontory with decreased debt levels, thereby improving its financial position during the current market downturn, while preparing the development for profitability and market leadership when the greater real estate market recovers."
The proposed plan of reorganization protects the interests of Promontory's residents, owners and Club Members. It also provides funding to continue development and amenity construction, thereby maintaining Promontory's original vision as a four-season, multi-generational luxury community. Promontory Club's membership agreements, and Promontory's obligations under lot purchase agreements and related development agreements, will be assumed by the new owners. Further, most key operational employees will be retained as Promontory continues its high standard of member services while restoring its development and sales operations. Finally, the plan establishes a reserve for payment of unsecured creditor claims.
Promontory will be the first luxury planned community to emerge from bankruptcy out of a number of projects that were forced into Chapter 11 in 2007-08. Unlike many of its competitors, Promontory has significant club amenities and services already in place at a time when other projects are either hamstrung by financial challenges or merely at the beginning stages of their development. Promontory's Jack Nicklaus Signature Golf Course, for example, was recently named #3 of the best new private courses in the country for 2008 by Golf Digest magazine.
Promontory is currently offering incentive pricing on custom lot deals entered into before the reorganization is complete. Noted Sonntag, "Aggressive sales strategies and cooperation with Park City's local brokerage community will continue to play an important role in Promontory's success. We've had a recent flurry of activity in resale custom homes and lots and we look forward to being a key part of the Park City real estate market rebound."
Court documents containing details of the Promontory reorganization plan are posted on the Promontory Unsecured Creditor's Committee website: www.promontorycommittee.com.
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