Bankruptcy auction closes without sale

A bankruptcy auction for a luxury golf community near Park City ended in chaos Wednesday, with a bank and the developer accusing each other of acting in bad faith.

Credit Suisse and shareholders for Phoenix-based Pivotal Group submitted the only bids, but neither side's offer was revealed even to auctioneer Richard Aaron.

"Everyone is confused," said Aaron, a retired University of Utah bankruptcy-law professor who ended up calling off the auction.

Without revealing any specifics, lawyers for both sides spent the day objecting that the other's bid wasn't enough or failed to satisfy terms of a court-approved reorganization. The attorneys refused to comment on the dispute, which goes to U.S. Bankruptcy Judge Judith Boulden in Salt Lake City on Friday.

Promontory, valued at $560 million before the recession took hold, was forced into bankruptcy in March 2008. It continues to operate on financing from Pivotal, which says the community of multimillion-dollar homes, opulent clubhouses, golf courses and horse stables remains viable.

Only half-built, the 10-square-mile development occupies a sagebrush-covered ridge overlooking Park City.

Until recently, it appeared that Promontory would become the first of several Western vacation communities to emerge from bankruptcy.

In court papers, Credit Suisse says Pivotal Group subsidiaries defaulted on $275 million in loans in December 2007. The bank doesn't hold the loans, which were sold to hedge funds and other investors, but it acts as agent for the loan holders.

Credit Suisse was involved in several other resort communities that remain in bankruptcy. It packaged loans of $375 million to the Yellowstone Club, a private ski and golf resort in Montana; $540 million to Lake Las Vegas resort, a golf community 17 miles from the Strip; $400 million to Turtle Bay Resort, a beach development in Hawaii; and $675 million to Ginn Resorts in Celebration, Fla.

At first, the lawyers refused to let the AP cover the Promontory auction, which was held at a Salt Lake City law firm. It took a court order from the bankruptcy judge to open the auction.