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  1. 1. UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 CORDILLERA GOLF CLUB, LLC/ Case No. 12-11893 (CSS) Debtor. Re: Docket Nos. 1, 69, 71, 78, 79, 92,93 Hearing Date: 7/16/12@ 10:00 a.m. JOINDER OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS IN: (I) MOTION OF CHERYL M. FOLEY, THOMAS WILNER, JANE WILNER, CHARLES JACKSON, MARY JACKSON AND KEVIN B. ALLEN, INDIVIDUALLY AND AS REPRESENTATIVES OF A CERTIFIED CLASS OF MEMBERS, TO TRANSFER VENUE; AND (II) MOTION OF CORDILLERA PROPERTY OWNERS ASSOCIATION, INC. AND CORDILLERA METROPOLITAN DISTRICT TO TRANSFER VENUE TO COLORADO The Official Committee of Unsecured Creditors ("Committee") appointed in the abovecaptioned, Chapter 11 bankruptcy case of Cordillera Golf Club, LLC ("Debtor"), by and throughits (proposed) undersigned counsel, respectfully files this Joinder (this "Joinder") in: (i) theMotion filed by Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jacksonand Kevin B. Allen, Individually and as Representatives of a Certified Class of Members, toTransfer Venue [Docket No. 69] (the "First Venue Motion); and (ii) the Motion filed byCordillera Property Owners Association, Inc. ("CPOA") and Cordillera Metropolitan District(the "District") to Transfer Venue to Colorado [Docket No. 79] ("Second Venue Motion"), andin support, would respectfully show this Court as follows: I. BACKGROUND 1. On June 26, 2012 ("Petition Date"), the Debtor filed its voluntary for relief underChapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101, et seq. (the "Bankruptcy The Debtor in this chapter II case, and the last four digits of its employer tax identification number, is: XX-XXX317. The corporate headquarters address for the Debtor is 97 Main Street, Suite E202, Edwards, co 81632.615266.17/11112
  2. 2. Code"), thereby initiating the above-captioned case with this Court (the "Bankruptcy Case"). The Debtor remains in control of its business and affairs as a debtor-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. 2. On July 6, 2012, the United States Trustee filed its Notice of Appointment of Committee of Unsecured Creditors [Docket No. 86], thereby forming the Comrnittee. 2 3. The Debtor is the owner and operator of "The Club at Cordillera" (the "Club"), located in Edwards Colorado in Eagle County. The Club includes three 18-hole golf courses, a short course, three tennis centers, fitness facilities, five indoor and outdoor pools, a sununer camp and clubhouse for children, and riding, hiking and cross-country ski trails. See Declaration of Daniel L. Fitchett, Jr. in Support of Chapter 11 Petitions and First Day Relief ("FitchettDeclaration"), ~ 7. The Club is the Debtors sole asset and only business. 4. The Club is located within the Cordillera residential community in Edwards,Colorado, and derives revenues through fees and dues related to Club memberships andmarketed to community residents and others. Fitchett Declaration, ~~ 5, 6, 8-12. Uponinformation and belief, the sole, ultimate equity interest holder in the Club is Mr. DavidWilhelm, a resident of Colorado. Fitchett Declaration, ~ 20; Consolidated Creditor Matrix[Docket No. 10], at p. 22. Mr. Wilhelm is also alleged to be a secured creditor of the Debtor,who, as of the Petition Date, is purportedly owed in excess of $7 million from the Debtor.Fitchett Declaration,~~ 53, 54. 5. On or about June 26, 2009, the Debtor entered into a loan agreement with AlpineBank, under which the Debtor owes Alpine in excess of $12.7 million, which debt is alleged to2 The Committees current membership is comprised of the following various homeowners and trade creditors of the Debtor: (i) John D. OBrien; (ii) Cheryl M. Foley; (iii) Ken Ulickey; (iv) Kevin B. Allen; (v) Dennis S. Meir; (vi) John S. Lemak; and (vii) Ceres Design & Arborscape, LLC. All of the Committees members have Colorado addresses.615266.1 7/11112 2
  3. 3. be secured by substantially all of the Debtors real and personal property. Fitchett Declaration, ~~ 50-52, 54. Alpine Bank is located in Colorado. Upon information and belief, Alpine Bank supports the transfer of venue of this Bankruptcy Case to the District of Colorado. B. The First Venue Motion 6. Over the past several years, the Debtors relationship with its members, comprising its largest creditor constituency, has become strained, resulting in ongoing litigation in Colorado state courts that is a central feature in the Debtors financial difficulties. First Venue Motion, at p. 2. 7. On July 3, 2012, Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson,Mary Jackson and Kevin B. Allen filed the First Venue Motion, as individual homeowners in the Cordillera community, members of the Debtor, and as representatives of a class of homeownermembers (collectively, the "Class Movants") certified in connection with litigation pending inColorado state court (the "Class Action"). First Venue Motion, at pp. 3-4. 8. Each of these class member Plaintiffs asserts a noncontingent, unsecured claimagainst the Debtor for the return of the members deposits with the Club, ranging in amount from$7,500 to $205,000, with an average of approximately $103,000, and for an aggregate total ofapproximately $62 million in pre-petition claims. See First Venue Motion, at Exh. A.Accordingly, this Plaintiff class by far comprises the largest claim constituency in this estate. Asthese creditors are comprised of Club members who are, in turn, largely comprised of Cordilleraresidents, these Plaintiffs, and their underlying interests, are essentially all located in Colorado. 9. Despite these facts, or perhaps concerned over the implications that would resultfrom this disclosure, the Debtor failed to include any of these creditors in its List of CreditorsHolding Twenty Largest Unsecured Claims filed with the Court [Docket No. 1] ("List of TwentvLargest"). According to the Plaintiffs, their members hold individual claims that exceed all but615266.1 7/11/12 3
  4. 4. one of the unsecured creditors that the Debtor included in its List of Twenty Largest. First Venue Motion, at p. 5. Notwithstanding, half of the creditors that the Debtor did list are also located in Colorado. 10. The Class Action involves the Plaintiff members claims for, inter alia, breach of contract, inducement, securities violations, and related causes of action against the Debtor and related parties, and seeks the return of deposits and membership dues and fees paid to the Debtor.First Venue Motion, at Exh. B. These monies were paid to the Debtor in reliance on certain express promises, commitments and representations to provide access to Club facilities and othermembership benefits and privileges. First Venue Motion, at Exh. B. II. On July 5, 2012, this Court entered its Order shortening the requisite notice periodfor the First Venue Motion [Docket No. 71], and setting an expedited hearing to consider themotion for July 16,2012, at 10:00 a.m.C. The Second Venue Motion 12. On July 5, 2012, the CPOA and the District filed their Second Venue Motion,through which these movants also joined in the First Venue Motion. The CPOA is one of twohomeowner associations governing the Cordillera community. Its membership is comprised ofprivate, individual homeowner consumers who also share similar claims and interests as theClass Movants. Related to this fact, the CPOA is the Defendant in separate litigationcommenced by the Debtor and pending in Colorado state court, apparently contending that theCPOA is somehow responsible for the determination of numerous of the Debtors members toseek to cancel their membership interests. Fitchett Declaration, ~ 6; Second Venue Motion, at~~ 25-29. 13. In addition to generally acting as a property owners association, the CPOA isinvolved in the provision of numerous community operations and public safety and welfare615266.1 7/11112 4
  5. 5. services, including, without limitation, the management, maintenance and operation of public facilities, programs and initiatives. Second Venue Motion, at ~ 26. The CPOA provides for its operating expenses through assessments charged on the sale of homes in Cordillera. 14. The District is a quasi-municipal "special" district created under the laws of Colorado as a political subdivision of the state, and constructs and manages all public facilities and infrastructure in the district. Second Venue Motion, at ~~ 20-21. The District includes Cordillera, under which the Debtor is one of the Districts two largest taxpayers. The District isthereby a secured creditor of the Debtor pursuant to various ad valorem tax obligations, and isowed approximately $205,311.31 corresponding to the Debtors 2011 assessments. 15. On July 9, 2012, this Court entered its Order shortening the requisite notice periodfor the Second Venue Motion [Docket No. 92], and setting an expedited hearing to consider thatmotion at the same time as the First Venue Motion (July 16,2012, at 10:00 a.m.). II. JOINDER IN REQUESTED RELIEF 16. The Committee hereby joins in the relief sought in both the First Venue Motionand the Second Venue Motion, and respectfully prays that this Court enter its order immediatelytransferring this Bankruptcy Case, and all related proceedings, to the District of Colorado forcontinued administration.B. Applicable Standards 17. Even where venue is proper, a court may nevertheless transfer a case, "in theinterest of justice or for convenience of the parties." 28 U.S.C. § 1412; Fed. R. Bankr.P.1014(a)(1). Specifically, 28 U.S.C. § 1412 provides in relevant part that this Court "may transfera case or proceeding under title 11 to a district court for another district, in the interest of justiceor for the convenience of the parties." 28 U.S.C. § 1412.615266.1 7/ll/12 5
  6. 6. 18. First, the "interest of justice component of § 1412 is a broad and flexible standard which must be applied on a case-by-case basis. It contemplates a consideration of whether transferring venue would promote the efficient administration of the bankruptcy estate, judicial economy, timeliness, and fairness ... " In re Manville Forest Products Corp., 896 F.2d 1384, 1391 (2d Cir.l990). Secondly, in consideration of the second clause of this statute- the convenience ofthe parties- courts typically engage in a factor based analysis that contemplates: (i) The proximity of creditors of every kind to the Court; (ii) The proximity ofthe bankrupt (debtor) to the Court; (iii) The proximity of the witnesses and proof necessary to the administration of the estate and availability of subpoena power for unwilling witnesses; (iv) The location of the assets; (v) The enforceability of judgments and economic administration of the estate; (vi) The ability to receive a fair trial; (vii) The states interest in having local controversies decided within its borders, by those familiar with its law; and (vii) The necessity for ancillary administration if bankruptcy [liquidation] should result.See In re LaGuardia Associates, L.P., 316 B.R. 832, 837 (Bankr. E.D. Pa. 2004) (citationsomitted); Matter of Continental Airlines, Inc., 133 B.R. 585, 587-88 (Bankr. D. Del. 1991)(simultaneously addressing interests of justice and convenience of the parties as relatedconsiderations).C. All Factors Weigh In Support of Transferring This Bankruptcy Case to the District of Colorado 19. Here, it is beyond dispute that the Debtor, and the vast majority of its creditors,including the Debtors most significant secured and unsecured creditors - the Class Action615266.1 7/11/12 6
  7. 7. Plaintiffs, the CPOA, the District, Mr. Wilhelm, Alpine Bank, and the members of the Committee- are all located in Colorado. There can be no dispute that venue for this Bankruptcy Case is proper in Colorado. 20. Of course, the Debtors assets are also uniquely situated in Colorado. This is not a mere case of a debtor who operates in national or international markets irrespective of its primary location or place of business. The Debtor has no product to offer other than the realproperty and related services and facilities in Colorado. Trade vendors providing services to the Debtor and those seeking to become customers I members of the Debtor must, with negligible exceptions, necessarily do so in Colorado. Day to day business operations of the Club occuronly in Colorado. 21. Because this case involves a significant real property development and aresidential community located in Colorado, the State of Colorado has a particularized interest inthe resolution of the disputes implicated in this Bankruptcy Case, which no other state canapproximate. In re Buffets Holdings, Inc., 397 B.R. 725, 730 (Bankr. D. Del. 2008); In rePortjef!Development Corp., 118 B.R. 184, 193-94 (Bankr. E.D.N.Y. 1990) (even where no otherfactor supports transfer, the presence of the debtors principal, if not sole, asset in the destinationdistrict "overwhelmingly militates in favor oftransfer ... "). 22. As cited in the First Venue Motion, this consideration is paramount where, ashere, the sole or central asset of the estate is comprised of real property. Courts recognize theunique relationship and interest that a state has in matters affecting its local real estate. See FirstVenue Motion, at p. 9. See also In re Enron Corp., 284 B.R. 376, 392 (Bankr. S.D.N.Y. 2002)("[m]atters concerning real property have always been of local concern and traditionally are615266.1 7/11/12 7
  8. 8. decided at the situs of the property." Citing and quoting In re Baltimore Food Systems, Inc., 71B.R. 795, 803 (Bankr. D.S.C. 1986)). 23. As to the remaining relevant factors, the major related litigation involving theDebtor is currently pending in Colorado state courts, and upon information and belief, theDebtors managers, principal offices, and books and records are all located in Colorado.Moreover, this case remains in its infancy, with only two hearings conducted, and primarily toconsider first day requests on an interim basis. Therefore, transferring venue to Colorado canonly maximize judicial economy and the availability of proof, while minimizing the burden onlitigants and parties in interest. This is particularly true in the event that this case becomes anorderly sale or liquidation as apparently contemplated. 3 See also In re Abacus BroadcastingCorp., 154 B.R. 682, 684 (Bankr. W.D. Tex. 1993) (where liquidation is contemplated, the courtshould consider the added burden that would result in requiring a trustee to administer assets in adistant location). Furthermore, the agreements between the Debtor and its creditors are primarilygoverned under Colorado law. 24. The totality of the circumstances applied here constitute a compelling case totransfer venue, not only for the convenience of the parties but also in the interests of justice. Thesole factor weighing in favor of the Debtors choice of forum is simply deference to the Debtorschoice of forum. However, here, there exists some indication that the Debtor has sought toactually discourage creditor participation through its choice of forum. In light of theoverwhelming nexus that Colorado has with the Debtor, its assets, creditors, and major disputes,and the corresponding lack of any meaningful nexus between the Debtor and Delaware, the The fact that the Debtor has proposed to sell one of its major golf course assets underscores this fact. Fitchett Declaration, 1111 41-42. Potential purchasers wishing to conduct due diligence in connection with this potential acquisition of a golf course facility must necessarily do so in Colorado and any sale would be subject to applicable Colorado law.615266.1 7/11/12 8
  9. 9. Debtors choice of forum appears to have no other basis. Critically, the vast majority of the Debtors creditors are comprised of individual, consumer homeowners and members located in Colorado. Many of these parties are in active litigation with the Debtor and its affiliates in Colorado. The adverse impact that these parties will suffer in having to participate in this case inDelaware are greater than might be expected of a business that is accustomed to operating in different markets, and would be particularly acute. The fact that the Debtor failed to disclose the locations of its true major unsecured creditors -these same individual homeowner members -istroubling and evidence of its attempt to disenfranchise unsecured creditors in this case. See alsoIn re Pine haven Associates, 132 B.R. 982, 990 (Bankr. E.D.N.Y. 1991) (debtors choice offorum is not entitled to deference where it appears motivated not by the convenience of theparties, but "to make this Chapter 11 case more burdensome to creditors and other interested .partres... ") .D. Conclusion 25. In sunrmary, the estates property is comprised of real estate and relatedoperations uniquely located in residential communities in Colorado. The Debtors assets,offices, operations, records, managers, and secured creditors are all located in Colorado. Manyof the Debtors creditors are private citizens whose participation in this Bankruptcy Case wouldbe strained and discouraged by the need to litigate in a distant forum. Therefore, as the Debtorhas no connection to Delaware other than its state of incorporation, this Court should exercise itsdiscretion to transfer this case to the District of Colorado.615266.1 7/ll/12 9
  10. 10. WHEREFORE, PREMISES CONSIDERED, the Official Committee of Unsecured Creditors respectfully joins in the requests of the Class Movants, CPOA, and District for this Courts entry of its Order immediately transferring this case to the District of Colorado, andgranting such other and further relief to the Committee as to which it has shown itself to be justlyentitled.Dated: July 11, 2012 SAUL EWING LLP By:-----:------,--:-::-----:.,-------- Mark Minuti (No. 2659) 222 Delaware Avenue, Suite 1200 P.O. Box 1266 Wilmington, DE 19899 Telephone: (302) 421-6840 Facsimile: (302) 421-5873 E-mail: mminuti@saul.com -and- MUNSCH HARDT KOPF & HARR, P.C. Russell L. Munsch Texas Bar No. 14671500 Joseph J. Wielebinski Texas Bar No. 21432400 Jay H. Ong Texas Bar No. 24028756 3 800 Lincoln Plaza 500 N. Akard Street Dallas, TX 75201-6659 Telephone: (214) 855-7500 Facsimile: (214) 978-4335 E-mail: rmunsch@munsch.com E-mail: jwielebinski@munsch.com E-mail: jong@munsch.com Proposed Counsel for the Official Committee of Unsecured Creditors615266.1 7111112 10
  11. 11. UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 CORDILLERA GOLF CLUB, LLC, Case No. 12-11893 (CSS) Debtor. CERTIFICATE OF SERVICE I, Mark Minuti, hereby certify that on July 11, 2012, I caused a copy of the foregoing I IJoinder of the Official Committee of Unsecured Creditors in: (I) Motion of Cheryl M.Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson and Kevin B. Allen,Individually and as Representatives of a Certified Class of Members, to Transfer Venue;and (II) Motion of Cordillera Property Owners Association, Inc. and CordilleraMetropolitan District to Transfer Venue to Colorado to be served on the parties on theattached service list in the manner indicated therein. SAUL EWING LLP By:.~--~~~--~~------- Mark Minuti (No. 2659) 222 Delaware Avenue, Suite 1200 P. 0. Box 1266 Wilmington, DE 19801-1266 (302) 421-6840615266.1 7/11112 I
  12. 12. CORDILLERA GOLF CLUB, LLC Service ListVia Hand Delivery: Matthew P. Ward, EsquireMichael R. Nestor, Esquire Ericka F. Johnson, EsquireJoseph M. Barry, Esquire Womble Carlyle Sandridge & Rice, LLPDonald J. Bowman, Esquire 222 Delaware Avenue, Suite 1501Young Conaway Stargatt & Taylor LLP Wilmington, DE 19801Rodney Square1000 North King Street Ellen W. Slights, EsquireWilmington, DE 19801 United States Attorneys Office District of DelawareMark Kenney, Esquire 1007 N. Orange Street, Suite 700Office of the United States Trustee P.O. Box 2046J. Caleb Boggs Federal Building Wilmington, DE 19899-2046844 King Street, Suite 2207Wilmington, DE 19801 Via Electronic Mail and First Class Mail:Mark D. Collins, Esquire Erika L. Morabito, EsquireZachary I. Shapiro, Esquire Brittney J. Nelson, EsquireRichards, Layton & Finger, P.A. Foley Lardner LLPOne Rodney Square 3000 K Street, N.W., Suite 600920 N. King Street Washington, DC 20007Wilmington, DE 19801 Christopher Celentino, EsquireTobey M. Daluz, Esquire Mikel Bistrow, EsquireJoshua E. Zugarman, Esquire Dawn Messick, EsquireBallard Spahr LLP Foley Lardner LLP919 N. Market Street, I Ith Floor 402 W. Broadway, Suite 2100Wilmington, DE 19801 San Diego, CA 92101Damien Tancredi, EsquireCozen OConnor, PC Carl A. Eklund, Esquire Ballard Spahr, LLP I1201 N. Market Street, Suite 1400 1225 I 7th Street, Suite 2300 IWilmington, DE 19801 Denver, CO 80202William P. Bowden, Esquire Vincent J. Marriott, III, EsquireRicardo Palacio, Esquire Sara Schindler-Williams, EsquireAshby & Geddes, P.A.500 Delaware avenue, 8th Floor Ballard Spahr, LLP 1735 Market Street, 51st Floor IP.O. Box 1150 Philadelphia, PA I 9 I 03Wilmington, DE 19899615266.1 7/ll/12
  13. 13. James J. Holman, Esquire Via First Class Mail: Duane Morris LLP Dan White 30 South 17th Street Cordillera Golf Club, LLC Philadelphia, PA 19103 97 Main Street, Suite E202 Edwards, CO 81632 Arthur J. Abramowitz, Esquire Cozen OConnor, PC Securities & Exchange Commission Libertyview, Suite 300 Central Regional Office 457 Haddonfield Road Attn: Office of General Counsel Cherry Hill, NJ 08002 (Bankruptcy) 1801 California Street, Suite 1500Brad W. Breslau, Esquire Denver, CO 80202Cozen OConnor, PC707 17th Street, Suite 3100 Colorado Department of RevenueDenver, CO 80202 Attn: Bankruptcy Unit 1375 Sherman Street, Room 1375Melissa Maxman, Esquire Denver, CO 80261Ronald Wick, EsquireCozen OConnor, PC Secretary of State1627 I Street, NW, Suite 1100 Division of CorporationsWashington, DC 20006 Franchise Tax John G. Townsend BuildingHarland W. Robins, Esquire 401 Federal Street- Suite 4Dickinson Wright PLLC P.O. Box 89815 N. 4th Street Dover, DE 19903Columbus, OH 43215 Secretary of TreasuryKristi A. Katsma, Esquire 820 Silver Lake Boulevard, Suite 100Dickinson Wright PLLC P.O. Box 7040500 Woodward Avenue, Suite 4000 Dover, DE 19903Detroit, MI 48226 George S. Canellos, Regional DirectorGarry R. Appel, Esquire Securities & Exchange CommissionAppel & Lucas, P.C.1660 17th Street, Suite 200 New York Office 3 World Financial Center, Suite 400 I IDenver, CO 80202 New York, NY 10281-1022 [Peter A. Cal, Esquire Internal Revenue ServiceMark L. Fulford, Esquire Department of TreasurySherman & Howard L.L.C. Ogden, UT 84201-0030633 17th Street, Suite 3000Denver, CO 80202 Internal Revenue Service Centralized Insolvency Section 2970 Market Street Philadelphia, PA 19104615266.1 7/11/12 2
  14. 14. Internal Revenue ServiceCentralized Insolvency SectionP.O. Box 7346Philadelphia, PA 19101-7346615266.1 7111112 3