Bankruptcy auction is planned for exclusive Park City development

Credit Suisse is unable to raise the money needed to bring a gated community near Park City out of bankruptcy.

The Swiss investment bank filed the disclosure in U.S. Bankruptcy Court in Salt Lake City.

The bank's exit means Promontory — a 10-square-mile community of multimillion-dollar homes, opulent clubhouses, golf courses and horse stables — will be auctioned to the highest bidder on April 15.

Credit Suisse provided much of Promontory's financing with $275 million in loans that were packaged and sold to hedge funds and other investors. The bank says the ranch development fell into default in December 2007. The bank has a responsibility as the loan agent to salvage the investment.

The developer, Phoenix-based Pivotal Group, is expected to be among the auction bidders. The company has provided money to keep the development going during bankruptcy.

Credit Suisse had the option of raising $70 million to pay some debts and sustain operations at Promontory under a reorganization plan approved March 12 by U.S. Bankruptcy Judge Judith Boulden.

But in the court filing last week, Credit Suisse said it "will not be able to obtain the exit financing" needed to reorganize Promontory. It didn't explain why.

Credit Suisse is likely to participate in the auction to make sure the development isn't sold for pennies on the dollar, said Thomas J. Beckett, a Salt Lake City bankruptcy lawyer for homeowners and other unsecured creditors.

The bank would likely bid up to the value of unsold lots and common facilities, he said. If somebody else bids higher, its investors would get some cash back, he said.

In an e-mail, Credit Suisse spokesman Duncan King said the bank didn't want to discuss its auction strategy.

Promontory is worth $229 million, according to a recent appraisal filed in bankruptcy court. That's less than half the $560 million value assigned when Promontory was forced into bankruptcy last March by a real estate meltdown that also troubled Montana's Yellowstone Club, Idaho's Tamarack Resort and Nevada's Lake Las Vegas community.

Credit Suisse invested in all of those resorts, which have declared bankruptcy.

With the bank taking a step back at Promontory, others "more directly involved in the development" can bid for control and may even accelerate Promontory's recovery, said Rich Sonntag, Promontory's managing director.