West Galena Real Estate LLC, a Utah developer, filed a recovery plan to surrender six luxury condominiums to its biggest creditor, reducing debt by about $25.4 million and allowing its exit from bankruptcy.
The properties, known as the Courcheval Development, are in the Telluride ski resort of Mountain Village, Colo. The plan was filed this week in U.S. Bankruptcy Court in Detroit.
West Galena, based in Park City, sought protection June 10 to halt a foreclosure sale of the condominiums by its largest lender, Narep II US REIT Assets Holdings LLC, which claimed the developer was in default. West Galena sued Narep, arguing that it hadn't defaulted and Narep had breached its contract by unfairly reducing its funding.
"The chronic delays and unjustified reductions" diminished working capital, making it difficult to pay contractors, West Galena said in the lawsuit.
According to the plan, Narep, with a claim of about $53 million, will receive the Courcheval property, a collateral for its claim, in return for reducing its claim by $25.4 million, subject to approval of the court. The remaining $28 million of Narep's claim will be treated as unsecured.
Unsecured creditors owed about $7 million will split the proceeds recovered from the lawsuit against Narep.
West Galena listed debt of $71.5 million and assets of $75.2 million in Chapter 11 documents filed June 24. West Galena filed for bankruptcy with affiliates Lot 129 LLC and West Galena Holdings LLC.