Consolidated Resorts Bankruptcy Auction Held

Bargain hunters and large resellers were out in force for the Consolidated Resorts bankruptcy auction on October 3 in Las Vegas.  Computers & cubicles from the call center, credit card processors, and even 27 minibuses were part of the hundreds of items up for bid.  Office fixtures were auctioned this week.

Overall, the physical assets were valued at $3.7 million – a tiny percentage of the $337.5 million of debt that caused the collapse of Consolidated.  With the auction, hopes are to bring in more, however, creditors cannot expect much more than a penny or two on the dollar in return.

For timeshare owners at the resort, it’s interesting to note that the minibuses that shuttled vacationers to and from Tahiti Village were sold.  It will make transportation more difficult for the timeshare occupants unless buses are being rented by the management of the resort.  Again, the resort itself is not in bankruptcy, only the developer.

Consolidated Resorts Bankruptcy Part V – Listing Companies Gone Wild

The Consolidated Resorts Bankruptcy has brought about plenty of worry for timeshare owners at their properties, most notibly Tahiti Village in Las Vegas.

We’ve heard reports that there are resale and listing companies that have gotten access to the timeshare owners’ contact information.  They are now telemarketing the owners to try to enlist them into their programs of paying upfront fees in order to sell their stakes in their timeshares.

Our hope is that no one takes their offers and wastes more good money after bad.  Who in their right mind would want to buy a timeshare at a bankrupt timeshare resort?  These companies may make a case that their are buyers in the wings eager to buy due to the drop in value.  The number of buyers of timeshares are very few to begin with.  We know that.  Only buyers who are ignorant of the facts would purchase a timeshare there.  Saavy investors would be smarter to find a way purchase the resort itself at a value cost instead of the timeshare units.

So, for those timeshare owners that are receiving telemarketing calls, remember not to pay anything upfront to simply list your timeshare.  A buyer will most likely never materialize.  If you upfront, make sure the company offers a guarantee of transaction like Timeshare Relief does.

For Part I of this series, click on this Consolidated Resorts Bankruptcy Part I link
For Part II of this series, click on this Consolidated Resorts Bankruptcy Part II link
For Part III of this series, click on this Consolidated Resorts Bankruptcy Part III link
For Part IV of this series, click on this Consolidated Resorts Bankruptcy Part IV link

Consolidated Resorts Bankruptcy Part IV – The Final Insult

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.

Consolidated Resorts Bankruptcy Part III – More Facts Emerging

More details about the Consolidated Resorts bankruptcy are emerging, specifically about how the bankruptcy will affect timeshare owners.

The article by John G. Edwards in the Las Vegas Review-Journal reports what the attorney from Consolidated Resorts has stated about timeshare owners of Consolidated Resorts timeshares.  According to Lenard Schwartzer who represents the company, timeshare owners are NOT affected by the bankruptcy filing.

“They are able to call up and get their week as if this bankruptcy never happened,” Schwartzer said.  He continues by stating that time share owners “hold deeds to time intervals at the resort and thus own the resorts.”

This last point is debatable since the company owns a master deed that allowed them to acquire the $250 million in credit which eventually led to the bankruptcy.  Furthermore, the lawyer states that the timeshare owners hold deeds to “time intervals at the resort” instead of deeds to the resort itself.  It can be argued that deeds to time intervals have little intrinsic value if the resort itself is bankrupt.

Again, according to the Consolidated Resorts lawyer, the company has sold most of the time shares at the resorts and the owner associations have enough money to maintain the properties. Also, the resort management companies that run the resorts did not file for bankruptcy.

Yet, the Consolidated Resorts and its 12 associated companies filed bankruptcy under Chapter 7, which calls for liquidation of assets for the benefit of creditors.  From a layperson’s point of view, this would mean that the company will have to sell its properties.  And then, the question becomes whether the new owner will keep the contracts in place.

Tomorrow in Part 4, there is one other interesting angle to this story – one that should point out that timeshare ownership is NOT an asset.

Go ahead and click on the labels “Part 1″ or “Part 2″ if you missed Part 1 or Part 2 of this story.

For Part V of this series, click on this Consolidated Resorts Bankruptcy Part V link