Receiver Michael Goldberg (with Governor Scott and Commissioner Pieciak) responds to a question following the announcement in April 2017 that Raymond James had settled $150 million related to the EB-5 fraud. Photo from the VermontBiz.
by Timothy McQuiston, Vermont Business Magazine A Park City, Utah resort company has offered to acquire Jay Peak Resort for $58 million. Jay Peak receiver Michael Goldberg will take that bid for Vermont’s northernmost ski resort unless a higher bid comes in next month. Goldberg announced the offer from Pacific Group Resorts Inc in a filing with the U.S. District Court in Miami on Monday.
Pacific Group’s offer is binding, according to Goldberg, regardless of any other offer.
“The time has come for the Receiver to sell the Jay Peak Resort. When the receiver took over the Jay Peak Resort in April 2016, it was on the verge of collapse with little money and very little profit. In fact, the receiver spent many sleepless nights in the summer of 2016 wondering if he’d even be able to make the payroll.
“Now, after more than 6 years, Jay Peak Resort is significantly more profitable and hundreds of jobs have been saved. The Receiver attributes this success to its top-notch management team and dedicated employees who work tirelessly to make from Jay Peak one of the largest ski resorts in the country.
The The ‘Ponzi-like’ scheme that resulted in the conviction of resort owner Ariel Quiros, his associate Bill Kelly and former chairman Bill Stenger was revealed on April 14, 2016when federal agents raided the offices of Jay Peak and Burke Mountain resorts.
The fraud involved immigrant investors who provided some $200 million for the chance to receive a permanent “green card” for themselves and their families, as well as a return on their investment through the federal EB-5 program.
It became the largest case of EB-5 fraud in the United States to date.
Burke Mountain is not part of the sale. Goldberg successfully resolved EB-5 claims for Jay Peak investments, but the Burke Mountain Hotel did not meet the minimum requirements for immigrant investors to receive their green cards.
The firm offer may seem small given past investments, but Stowe Mountain Resort was acquired by Vail in 2017 for $41 million. While Stowe has more visitors, this deal did not include the Spruce Peak portion of the resort complex. The Jay Peak deal includes nearly all of the real estate, including the popular water park, hotels, golf course, hockey rink and condos.
Pacific Group is a much smaller company than Vail or Alterra, tied to Aspen, who acquired Sugarbush in 2020. These resort companies have properties scattered across North America.
Pacific Group owns and operates a handful of resorts in North America, the best known of which is probably the Powderhorn Mountain Resort in Colorado. More locally, he also owns Ragged Mountain in Danbury, NH.
The Jay Peak deal binds Pacific Group, but if Goldberg’s case is accepted by the court, which it almost certainly will be, another bidder will have 30 days to submit its own binding bid.
If there are no other bidders, Pacific Groups will acquire Jay Peak for that $58 million. Proceeds from the sale will be distributed to investors in Jay Peak EB-5.
If there are other qualified bidders, an auction will ensue and the Goldberg will determine (with court acceptance) who ultimately owns the station.
As Goldberg wrote in the August 1, 2022 court filing: “The order appointing the receiver vests title to all property of the receiver entities…in the receiver. As such, the Receiver has the power, subject to court approval, to sell all of the assets…constituting the Jay Peak Resort, subject to court approval.
“By this motion, the Receiver seeks to sell the Jay Peak Resort to a third party, Pacific Group Resorts, Inc (through an affiliate thereof), subject to an appeal process of offers and auction detailed herein, for a total consideration of not less than fifty-eight million dollars ($58,000,000). The sale will be “free and clear” of liens, the liens being attached to the proceeds of the sale. sale, unless otherwise provided in the asset purchase agreement.
“The Receiver believes that the proposed sale is in the best interests of the Receiver Estate because: (i)
The Jay Peak Resort has substantial running costs; (ii) the Receiver and its professionals, including Houlihan Lokey, have been actively marketing the Jay Peak Resort for sale for 4 years, and the Asset Purchase Agreement commemorates the highest and best offer received to date; and (iii) the sale will allow the receiver to make a further distribution to investors. »
Goldberg said other parties have expressed interest in purchasing the Jay Peak Resort over the past few years, however, only Pacific Group has been willing to submit a binding offer.
Goldberg said in his filing that he “hopes another bidder may surface at the auction.”
Goldberg is seeking to sell the Jay Peak Resort through a public bidding and auction process in which it can “solicit higher and better bids.”
“If the Receiver receives qualified bids, it will hold an auction via Zoom, as set out in the bidding procedures. In the absence of receipt of a qualified offer constituting a superior and better offer, the receiver may treat the offer of the buyer (Pacific Group) as the highest or otherwise the best offer, and will proceed with the transaction. as provided by the APA, subject to final court approval. »
A final hearing to consider approval for the sale of Jay Peak Resort is scheduled for August 22, 2022 in the U.S. District Court in Miami.
The Pump House water park. Photo courtesy of Jay Peak Resort.