Nov

Promontory’s Bankruptcy Plan Amended

Last night Promontory filed its First Amended Bankruptcy plan. Promontory’s amended plan would still provide for membership agreements and lot purchase agreements, as well as the overall development plan, to be re-instated and honored going forward. It would also provide for a substantial, perhaps complete, recovery for unsecured creditors.

The proposed Amended Plan, if confirmed, would also provide, very generally (no terms are final until a plan is confirmed by the Bankruptcy Court), as follows:

1. The Promontory Ranch would be sold pursuant to the best offer made by an acquirer who wants to and appears able to finance the development through these challenging economic times;
2.  The proceeds of the sale would be distributed to the secured lenders;
3.  The unsecured creditors would be paid with a settlement payment from Pivotal; and
4.  The Unsecured Creditors Committee would, among other things, (i) assist Promontory substantially in the marketing and sale of the development, and the vetting of potential new owners, (ii) take primary responsibility for the resolution of disputed unsecured claims against the debtors and claims the debtors may have against their secured lenders, and (iii) propose a representative to serve initially on the board of the new owner, whoever that may be.

The Bankruptcy Court will consider the adequacy of Promontory’s proposed Disclosure Statement on December 4, 2008, beginning at 9:00 am.

If the Court approves the proposed Disclosure Statement (and please note that the Disclosure Statement may be modified further before it is considered by the Court), then the approved disclosure statement would be distributed, along with a proposed reorganization plan (which may also be modified before it is circulated) for consideration by those who are affected by the plan. Those who are entitled to vote on the plan would then vote and the Court would then consider whether that plan can be confirmed under the Bankruptcy Code. Promontory would not emerge from Bankruptcy until the Court has confirmed a plan. The Committee wants that to happen as quickly as is appropriate – and there may be further developments in the very near future – but no outcome is certain at this time…..so don’t hold your breath!