Updated at 7:28 p.m.
Michael Goldberg, the court-appointed receiver in charge of overseeing Jay Peak for more than six years, has a $58 million offer to buy the scandal-plagued ski resort in Vermont’s Northeast Kingdom.
“The time has come for the Receiver to sell the Jay Peak Resort,” Goldberg said in a filing submitted in a federal court in Florida on Monday.
Goldberg’s filing stated that the resort has a $58 million offer from Pacific Group Resorts Inc. for the resort, though he wants to be allowed to continue to seek qualified buyers and, if a matching or higher price is offered, an auction would be held to sell the resort.
“Absent receipt of a Qualified Bid constituting a higher and better offer for the Assets, the Receiver may deem Buyer’s bid the highest or otherwise best offer, and may proceed with the transaction,” Goldberg’s filing stated.
Pacific Group Resorts, based in Park City, Utah, owns several smaller ski resorts, including Ragged Mountain in New Hampshire and Powderhorn Mountain Resort in Colorado.
Ariel Quiros, Jay Peak’s former owner, and his former business partner, Bill Stenger, Jay Peak’s former president, had funded massive upgrades at the resort, including new hotels and a water park, paid for with funds raised through the federal EB-5 visa program.
According to separate lawsuits brought in April 2016 by state and federal regulators, Quiros and Stenger misused $200 million of the more than $350 million they raised from EB-5 investors.
Regulators said Quiros alone “looted” more than $50 million for himself for personal expenses, including buying a luxury condo in New York City.
Quiros and Stenger have since reached settlements — neither denying nor admitting fault — with the U.S. Securities and Exchange Commission and state regulators in the cases.
Both men were also federally indicted on crimes in connection with another EB-5 financed project to build a $110 million biomedical research center in Newport, later deemed by federal regulators “nearly a complete fraud,” and both are serving prison terms.
The proceeds from Jay Peak’s sale, according to past court filings by Goldberg, will be distributed on a “pro rata” basis to the defrauded investors.
Goldberg submitted his filing Monday in the U.S. District Court in Miami, Florida, since that is the court where the U.S. Securities and Exchange Commission brought its civil enforcement action against Stenger and Quiros in April 2016. Quiros was living in Florida at that time and many of his businesses and holding companies were based in Miami. It was through that SEC action that Goldberg became the receiver overseeing the Jay Peak resort.
Jay Peak was valued on the town of Jay’s grand list at $121 million. Resort officials later appealed, arguing that its actual value in 2020 was about half that amount. In a settlement, the town and resort settled at an assessed value of about $85 million.
“Other parties have expressed interest in purchasing the Jay Peak Resort over the past few years; however, only Pacific Group Resorts Inc. has been willing to submit a binding bid,” a footnote in the 15-page filing stated. “The Receiver is hopeful that perhaps another bidder will surface at the auction.”
Mark Fischer, Pacific Group Resorts’ chief financial officer, said Tuesday afternoon that the judge has yet to rule on the receiver’s motion seeking approval to move ahead with the proposed sale process. Fischer said that, until that happens, there is no official offer or any signed agreements in place.
“We have to work through the receiver and the receiver files a motion with the judge and the judge rules on whether he is willing to begin the sales process,” Fischer said. “The judge is under no obligation to begin that sales process.”
Nothing happens, Fischer said, until the judge makes a ruling.
“If the judge agrees to move forward with the process, we are the opening bidder,” Fischer said.
Asked to talk about Pacific Group Resorts’ interest in Jay Peak, he responded that it was premature to comment and cautioned against any speculation regarding the sale process.
In January 2019, Goldberg hired Houlihan Lokey Inc., an investment banking and financial services firm headquartered in Los Angeles, to assist in marketing Jay Peak.
The filing Monday stated that Goldberg “directly marketed” the resort to more than 165 parties made up of “strategic buyers, financial buyers, family offices and high net worth individuals.”
Of those, 57 parties entered into nondisclosure agreements to get a closer look at the books, the filing stated, and 15 entities submitted nonbinding proposals.
If the judge approves Goldberg’s plan, bidders will have 30 days from that order to submit bids for the resort.
If no qualified bid comes in, the filing stated, Goldberg “may thus deem” Pacific Group Resorts’ bid the “highest or otherwise best offer” and move forward with completing the transaction, provided the judge approves.
The filing doesn’t state what happens if Goldberg should decide not to move forward with the transaction, absent other offers. If at least one other qualified bid is submitted, according to the filing, an online video auction would take place.
Bidding would start at the $58 million from Pacific Group Resorts, the document stated, with an “initial bid increment” of $1.75 million or higher, followed by bid increments of at least $250,000.
“The Auction shall conclude when the Receiver receives what is determined by (the) Receiver in his sole discretion to be the highest and best offer for the Assets,” the filing stated.
“Subject only to the subsequent approval of the District Court,” the document added, “the Receiver shall have the unfettered discretion to determine the Prevailing Bid and designate a Back-Up Bidder.”
Steve Wright, Jay Peak’s general manager, said Tuesday that any sale of the resort is still in the “early” stages.
“There is a lot more that will come through as we kind of move through the timeline, as we move through August and into September,” he said.
“Although the (Pacific Group Resorts) name is out there right now,” Wright said, “this really is sort of the opening salvo of this process and there’ll be more that will come through as we move through the month.”
Jim Campbell, who operates Jim Campbell Real Estate with offices in Jay and Newport, said Tuesday he was a little surprised to hear the $58 million figure associated with the sale of Jay Peak, even as an opening bid.
“I think it’s an amazing buy for that,” Campbell said. “There was almost $300 million spent up there.”
He said the pace of condominium and home sales in the area has been brisk, but it’s a niche market for a ski resort.
“It’s not like they’re standing in line waiting to buy properties like that,” he said. “I knew somebody was going to get a deal there, but honestly I thought it was going upwards of $75, $80 (million) was my guess.”