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