Epic Resorts

Client

Epic Resorts, LLC was a developer, manager and financer of time share vacation ownership interests. The Company operated six resorts throughout the United States and had approximately 500 employees.

Challenge

Epic was forced into bankruptcy because the Company was unable to arrange financing for the sale of vacation ownership interests. Post bankruptcy filing, the CEO transferred resort management contracts to a newly formed company which he owned. The Court removed the CEO from certain operations and appointed a Bridge professional as Chapter 11 Trustee for the Debtor's business which primarily held title to resort real estate. However, the Court did not remove the CEO from resort operations. This bifurcated management structure prevented the Company from unlocking key tangible real property value, which was needed to provide some measure of return to secured creditors. In addition, the resort operating results were creating a liquidity crisis, primarily due to below-market pricing.

Solution

Bridge immediately began litigation to gain control of the resort management contracts controlled by the former CEO. This matter was settled after protracted litigation, which included significant testimony by Bridge professionals. Concurrently, Bridge implemented a number of performance improvements aimed at increasing the value of consumer note portfolios, which were the main source of operating cash. Once control of resort management reverted to the Trustee, Bridge professionals implemented a rapid improvement plan, which included substantial reduction in overhead costs, enhancement to revenue through price increases, and improvements in performance measurement. Bridge developed multiple restructuring scenarios, which revealed that the highest return to creditors could be accomplished through a sale of substantially all operating assets.

Results

Operations were stabilized to a point where the primary business became cash positive, excluding capital expenditures and bankruptcy related expenses. Bridge was able to secure DIP and other financing of approximately $8 million to support the operations through the litigation and restructuring. Bridge managed the sale of virtually all of the Company's assets for a total of approximately $20 million.