This story by Chris Mays was published in the Brattleboro Reformer on May 22.
[N]EWFANE — The role of a receiver, who will take care and custody of foreclosed Hermitage Club properties before the company secures a loan to pay off debts or a public auction is held, is being ironed out.
In a decision issued Friday, Judge John Treadwell wrote, “there is no evidence to support a finding that the Hermitage defendants have adequate resources to preserve and protect the subject properties during the pendency of this foreclosure action.”
At the request of the plaintiff Berkshire Bank, the court will appoint Alan Tantleff of FTI Consulting as the receiver. His firm has served as receiver to more than 53 major resort and hospitality properties.
Berkshire Bank has until Thursday to submit a proposal on the responsibilities of the receiver. Hermitage has until May 29 to file an objection.
Part of the bank’s proposal will need to address the potential dissolution of the receivership if the Hermitage gets a loan that company officials have discussed. A term sheet from Wells Fargo Bank was provided to the court, outlining plans for NorthOne Capital Partners LLC to provide the Hermitage a loan to pay off debt to the bank on May 15.
But Treadwell said “no competent evidence” was presented at the hearing to support a finding that the proposed loan had been made and the terms of the proposal had expired. He noted that neither Barnes nor any representative of the lender or borrower testified at a hearing, but insurance agent Trip Morse told the court the Hermitage’s insurance policy will expire on June 4.
Treadwell had concerns about the proposed fees — $32,500 for the first two months then $16,500 for every month after —– without knowing “what work Mr. Tantleff will perform.”
Treadwell also wants a different law firm to represent Tantleff after Berkshire Bank recommended using Ryan Smith & Carbine, LTD, the firm the bank retained for this litigation.
Berkshire Bank filed a foreclosure complaint in February. In April, it sought the appointment of a receiver to protect and preserve approximately $33 million worth of property spanning more than 838 acres — a private ski resort at Haystack Mountain, a golf course, the Hermitage Inn, the Horizon Inn, the Snow Goose Inn, the Doveberry Inn and homes at different stages of construction — subject to the foreclosure.
The Hermitage defaulted on more than $17 million in debt obligations for a construction mortgage, a construction loan and a mortgage deed. The complaint included 35 liens for bills and claims adding up to more than $12 million.
The defendants — Hermitage Inn Real Estate Holding Company LLC, Hermitage Club LLC and Hermitage founder Jim Barnes — opposed the bank’s motion and called the appointment “unnecessary at this time.” They requested the judge wait at least until June 1 before appointing a receiver.
“The Hermitage is not a going concern,” Treadwell wrote, using the same words the bank used in a motion to appoint a receiver. The Hermitage “ran out of cash during the first quarter of 2018,” he added. “There are unpaid bills, taxes and lease payments.”
Regarding receivership, Treadwell called the harm to the Hermitage “insubstantial in comparison to the potential harm” to Berkshire Bank.
Company officials said the buildings and assets were “receiving full security tours with daily check points” by employees. But the size, complexity and value of the properties caused Treadwell to side with the bank in calling for their protection from theft and vandalism.
Wilmington Town Manager Scott Tucker told the Reformer that town officials have been concerned about fire safety and security at the properties for a while. He believes having a “neutral party that’s accountable to court” makes “a whole lot of sense.”
“A lot of people in town, before I ever came here, put their heart and soul into the success of the Hermitage so I think that people want the Hermitage to survive,” he said. “They want it to be successful and to be a real partner with the town, I believe.”
Tucker called the appointment “a good thing.”
“I think it makes sense at this stage of the game and it looks like the court is asking for more specific information in terms of the role of the receiver,” Tucker said, adding that Tantleff and his firm are “pretty well qualified” for the job. “I know Yellowstone Club is actually back on its feet.”
Tucker said he is disappointed the Hermitage will not be running the golf course this year.
“I know a lot of local people like to golf there. I’ve been asked a few times,” said Tucker, who is optimistic about the Hermitage opening in time for next ski season. “It’s a big part of the town in terms of its vitality, I think.”
He added, “Of course the best outcome I think is that everyone would be made whole through this process. That’s what the town would really like to see happen so whoever the next owner is, whether it’s a group or individual or what not, could start with a clean slate and begin earning back the goodwill of the town and the vendors and all the people who supported the Hermitage a number of years ago. I think that’s important for their success as well.”
Tucker believes the “outstanding” condition of the properties might be the silver lining.
“And I think that speaks well of the quality that Jim Barnes and everyone related to the Hermitage was really trying to accomplish in the first place,” said Tucker.
Rep. John Gannon, D-Windham 6, who also serves on the Wilmington Select Board, believes the receivership will be good for the town and other parties.
“The receiver has experience with the Yellowstone Club and other private clubs and will bring needed stability to the management of the the Hermitage Club’s assets,” he told the Reformer.
Not everyone is as optimistic.
Lori Winchester, owner of Mountain Glass and Lock Corp. in Rutland, is listed as a lien holder in the foreclosure complaint. She is owed about $46,000 for work in six condominiums and does not believe she will be paid.
“I really feel hopeless; hopeless is the perfect word,” Winchester told the Reformer. “I live a pretty modest life and I’m hoping to retire so something like this just about kills us all. And it’s like they don’t care.”
She has been in business for about 30 years.
