In the last post, we dissected what the lawyer for Consolidated Resorts had to say about timeshare owners and their claim to using their timeshare weeks.
According to the article by John G. Edwards in the Las Vegas Review-Journal, attorneys for Consolidated Resorts fear that some timeshare owners may stop making payments. So Judge Linda Riegle authorized the companies to temporarily hire a company to start collection actions against delinquent timeshare owners, pending a final decision on a contract with a collection company.
So, timeshare owners must continue to pay their mortgages and payments even though the company itself is bankrupt? Or, they’ll be threatened by a collections agency. Given this fact, would you say that the timeshare there is an asset or a liability?
This article continues to explain how timeshare companies in the past financed major percentages of timeshare purchases and then were able to sell the loans on the secondary market – the same methods used on Wall Street that caused the now global economic meltdown.
The major creditor to the company is GMAC Commercial Finance which provided a $250 million line of credit as well as a $200 million acquisition and development loan. Other creditors included HSBC Bank USA, Textron and several thousand timeshare sales prospects who were promised four days in Las Vegas.
Consolidated and the 12 related companies filed for Chapter 7, which calls for liquidation of assets for the benefit of creditors.
Tahiti Village Resort in Las Vegas on the famed Las Vegas Strip had to close and in the process laid off over 1,200 employees and contract workers.
For Part V of this series, click on this Consolidated Resorts Bankruptcy Part V link
For Part I of this series, click on the Consolidated Resorts Bankruptcy Part I link.
For Part II of this series, click on the Consolidated Resorts Bankruptcy Part II link.
For Part III of this series, click on the Consolidated Resorts Bankruptcy Part III link.