Kmart pass holders still paying lawyers

[Clarkl23]

I believe the new owners of Attitash did the same thing, bought the assets without buying the company so they could shed a bunch of lifetime pass holders. I seem to recall Wildcat trying to do it too, but they mostly backed off to some extent. I think the current pass holders pay a small yearly fee of some sort, but I don't know the exact details.

Clark

 

[dl]

It's my understanding that all Attitash lifetime passes have been honored. I know several people who have the passes and while there was some concern at the outset the current management has continued honor these.

 

[mister moose]

I thought the same thing but have since changed my opinion. There is legal precedent that KSRP does indeed inherit the obligations and it's not just an asset sale. It's the same employees and the same business. There have been cases where similar legal slight of hand happened... toxic waste issues... asbestos... where the 'asset buyer' was held liable for the obligations of the previous business owner.

I figure it's highly likely that a jury will decide in the favor of the lifetime pass holders. It's not like a bunch of Vermonters sitting on a jury are going to have any sympathy for Utah and Texas corporate money.

Welcome to enlightenment. Now about your beer selections.....

KSRP bought and kept essentially every asset of Killington, from the logo to the website to the employees to an assigned lease, not a new lease. If they had come in, hired half new staff, changed the name of the resort, and negotiated a new lease, I would agree the passholders were now SOL. Even the newspaper thinks it's the same company:

Following the purchase of Killington Resort in May 2007, owners SP Land Company and Powdr Corp. cancelled what it considered investor season passes. The companies operate the resort under Killington/Pico Ski Resort Partners. (Powdr Corp. is not named in the lawsuit).

If the Times Argus is so confused by the sale that it thinks the entire resort was sold, and not just an asset sale, what is a jury to think?

To put this into perspective, what about investors at Magic that might get offered transferable lifetime pass benefits if they step in now to save a struggling mountain? How many will sign up for that if there is an asterisk that says "Except in case of fancy lawyering, in which case you have squat" I think the intent is quite clear. Honor the passes. (I have no financial interest in the pass litigation)

 

[Grassi21]

A bit too harsh. Hawkshot was just voicing his opinion, no need to call him names because his view doesn't match yours.

+1. chill tyler.

 

[Tin Woodsman]

I have zero sympathy for those who purchased the passes on the secondary market and didn't contribute a dime to building Killington. Surely there is a significant contingent among those 1,243 who fit this description. It will certainly be interesting to see if the jury decides that the asset sale mechanism was simply a ruse to avoid honoring lifetime passes. That's the real issue here - peoples' uninformed personal notions of "what's fair" are irrelevant from a legal perspective.

As for the Times Argus getting it wrong, if you expect a journalism major at a backwoods newspaper to get the facts right with respect to complex issues of M&A law, I think you're expectations of the media need to be recalibrated.

 

[Edd]

...those who purchased the passes on the secondary market and didn't contribute a dime to building Killington.

This isn't entirely accurate is it? How many of these secondary buyers purchased gear / food / beverage / lodging and brought others with them who purchased all of the same plus passes? Gotta take the long view.

 

[Geoff]

This isn't entirely accurate is it? How many of these secondary buyers purchased gear / food / beverage / lodging and brought others with them who purchased all of the same plus passes? Gotta take the long view.

The long view is "how many of those secondary pass buyers are completely locked into Killington regardless of whether they have a lifetime pass or not?"

Everybody I know who bought a lifetime pass on the secondary market owns real estate in town. That includes at least one Selectman. They're all buying regular season passes this year. The only people I feel bad for are the retirees I know who live at Killington and factored the lifetime pass into their financial planning. Sure, most of them are old enough to get the Senior Pass product but when you're on a fixed income, even that is something of a hit when skiing was supposed to be paid for.

At this point, it's up to the jury unless KSRP settles.

 

[mister moose]

I have zero sympathy for those who purchased the passes on the secondary market and didn't contribute a dime to building Killington.

I think I get where you're coming from, but I disagree. The original bondholders were awarded free skiing, the priviledge and bond was transferable, and stated so on the bond. Therefore, the ability to sell the bond was contemplated from the get-go. The rights and priviledges of the secondary buyers are just as valid as the primary, unless you want to strip some of the rights and value from the primary holder. He woud then be unable to sell, and would have less value to his bond.

As for the Times Argus getting it wrong, if you expect a journalism major at a backwoods newspaper to get the facts right with respect to complex issues of M&A law, I think you're expectations of the media need to be recalibrated.

And what if that "backwoods journalist" is on the jury, or is representative of who would sit on the jury?

 

[tcharron]

"According to court documents, the class action includes 1,243 investor pass holders, which were issued between 1958 and 1965. Over the years, some passes have been sold and then resold."

My guess is that most of these passholders are now eligible for "Senior" passes. Who set the market for resale ? What is the obligation to the current owners for the resold passes? Hard to tell obligations without seeing the original contracts.

I can't find the original text, someone posted a scan of it when this all came down. But basically, it stated that they may be transfered, with proper notification to the company.

 

[tcharron]

your an asshole.

it was promised to these passholders as far back as the late 60s. the new owners should be bound to respect the promises that the past owners committed to, just as they would be to their debt.

this is just another reason why i hate kmart

So, you should start paying fees to Ma Bell like their original contract with the US Government stated that any telephone owners need to pay.

 

[bigbog]

SRObserver...
Can I smell a book deal involved somewhere........;-)

 

[tcharron]

Vermont could get a bad name over this. Tourists welcome to Vermont where your purchases may not be at all what you thought you were getting. The guarantee is there are no guarantees. Its the Vermont way.

A lifetime pass by definition is for a lifetime. Anything else is for lack of a better word is STEALING. These ski corporations may have just as well held a gun to the lifetime pass holders and said give me your all your money.

The new Killington owners must figure they can get away with this given the current Vermont state laws.

Lifetime of who? Everyone, for all eternity? So for all eternity, they have to charge everyone who DOESN'T own one a product which is marked up so they can cover the 1k+ people who had an unlimited ski pass? Most of which had bought it off of someone else who had already skid 40 years of it?

Your the kind of prick who's going to start a HUGE argument with the manager at the buffet when they cut you off at the 'all you can eat' line.

 

[millerm277]

Lifetime of who? Everyone, for all eternity? So for all eternity, they have to charge everyone who DOESN'T own one a product which is marked up so they can cover the 1k+ people who had an unlimited ski pass? Most of which had bought it off of someone else who had already skid 40 years of it?

The vast majority is single transfer only, so they will expire eventually.

Your the kind of prick who's going to start a HUGE argument with the manager at the buffet when they cut you off at the 'all you can eat' line.

Um, really....you should be allowed all you can eat. Just saying....

 

[Geoff]

So, you should start paying fees to Ma Bell like their original contract with the US Government stated that any telephone owners need to pay.

Wut?

 

[ski_resort_observer]

SRObserver...
Can I smell a book deal involved somewhere........;-)

Well, it certainly does smell in here.That dead horse is starting to really stink :lol:

 

[tcharron]

Wut?

In order for them to lay the original lines, the agreement was that you had to use their service. This is where the local telephone monopolies evolved from. Except before the exchanges where mandated, you might not be able to call from one town to the next.

 

[Tin Woodsman]

I think I get where you're coming from, but I disagree. The original bondholders were awarded free skiing, the priviledge and bond was transferable, and stated so on the bond. Therefore, the ability to sell the bond was contemplated from the get-go. The rights and priviledges of the secondary buyers are just as valid as the primary, unless you want to strip some of the rights and value from the primary holder. He woud then be unable to sell, and would have less value to his bond.

The status of their legal rights with respect to the pass has nothing to do with my level of sympathy for them. They didn't take any risk in investing a significant sum of money to help build a fledgling ski resort. They simply bought their pass w/o (so they thought) any risk to them. The original passholders invested the money with zero certainty regarding future returns, not knowing whether the whole operation would go tits up in a year or two. There is no question that certain of the passes are transferable, but I'm not arguing that.

And what if that "backwoods journalist" is on the jury, or is representative of who would sit on the jury?

Juries will have days and days of testimony to hear and evaluate. I'm sure they will receive a pretty deep education in the precedents on both sides. I don't expect KSRP to win b/c ultimately the jurors will go with their heart. Regardless, this wasn't a think piece for the NY Times Magazine. It was an update on an ongoing case of moderate local interest. My comment was more about the non-existent standards in newspaper journalism these days rather than a statement about who is likely to win. If you ever read a newspaper story about a somewhat technical/complex issue that you are pretty knowledgeable about, you instantly know that the author most often barely knows what he's talking about. They are journalism majors looking to sell newspapers. Nothing more.

 

[millerm277]

My comment was more about the non-existent standards in newspaper journalism these days rather than a statement about who is likely to win. If you ever read a newspaper story about a somewhat technical/complex issue that you are pretty knowledgeable about, you instantly know that the author most often barely knows what he's talking about. They are journalism majors looking to sell newspapers. Nothing more.

Eh. Has it ever been any different? Papers seem a hell of a lot more honest and reliable than in, say, the early 1900s.

 

[mister moose]

The status of their legal rights with respect to the pass has nothing to do with my level of sympathy for them. They didn't take any risk in investing a significant sum of money to help build a fledgling ski resort. They simply bought their pass w/o (so they thought) any risk to them. The original passholders invested the money with zero certainty regarding future returns, not knowing whether the whole operation would go tits up in a year or two. There is no question that certain of the passes are transferable, but I'm not arguing that.

It took a few reads to realize that the 'them' you refer to are the secondary buyers, and I see your point that they took less risk. But you are forgeting/ignoring the two aspects of the original bond investment. There were two inducements for investment. One was interest paid on the capital invested. The other was the transferable lifetime pass. The capital has been paid back, and the interest has been paid. Those original investors still have the right, and as part of the the compensation for their original risk, to sell their bond. You would take that right away from them (and their assigns) because.... the company they founded and funded was successful?

Juries will have days and days of testimony to hear and evaluate. I'm sure they will receive a pretty deep education in the precedents on both sides. I don't expect KSRP to win b/c ultimately the jurors will go with their heart. Regardless, this wasn't a think piece for the NY Times Magazine. It was an update on an ongoing case of moderate local interest. My comment was more about the non-existent standards in newspaper journalism these days rather than a statement about who is likely to win. If you ever read a newspaper story about a somewhat technical/complex issue that you are pretty knowledgeable about, you instantly know that the author most often barely knows what he's talking about. They are journalism majors looking to sell newspapers. Nothing more.

Right. I have seen the lack of accuracy you are refering to, both in newspapers and TV. But if a reporter for a local paper from which the jury pool will be selected can't easily tell the difference between Killington the resort that Pres built and Killington the collection of assets that POWDR bought, how do you think the rest of the jury pool will likely see it? They will bring that perspective to the jury pool. That perspective will survive their education on facts of the case and case law. That's my point. The If-it-walks like-a-duck principle.

 

[jaywbigred]

Pretty interesting case. Would love to read the original contracts, and see the differences between the different classes of pass holders. I just read this whole thread and it sounds like there might actually be 3 classes? 1) A class that has a pass that lasts their lifetime and is not transferable; 2) a class that has a bond that is assignable on a yearly basis, allowing them to, in effect, sell yearly passes at a rate below that set by the mountain, and which expires at the end of the lifetime of the bond holder; and 3) a class that has a pass which may be transferred a single time (which, in essence, makes it a "Two Lifetime" pass, imo).

This is a tough situation, I really see both sides of the argument. I feel the most sympathy for Class 1 holders, but still feel sympathy for the others too. They are not receiving the benefits of the bargain into which they originally entered, and certainly it is likely that a number of them would not have invested whatever they did (initial cost, real estate they bought, years spent at Kton, etc) had they known they would eventually have their rights extinguished.

On the flip side, you can see from a business perspective why you would want to structure such a purchase as an Asset Purchase. First and foremost, Killington is a big operation, and from a legal perspective, there could be a lot of potential liabilities waiting in the weeds. Skiers for whom the statute of limitations has not run on their injuries, environmental liabilities, etc... Additionally, you have this issue of the passholders. So it only makes sense to structure the deal as an Asset Purchase in an attempt to cut ties with the liabilities of the predecessor.

It is true that in certain situations, public policy dictates that despite a deal being structured as an Asset Purchase, a court will look through the form in order to provide an aggrieved party with a remedy. The situations I remember studying are product liability cases, tort cases (personal injury), and environmental liability cases. I believe there are important questions, in these areas, regarding whether the purchaser knew of the liabilities at the time of purchase.

It wouldn't surprise me if you could find a few cases out there where a court extended the "continuity of enterprise" doctrine (which, despite the deal being structured as an Asset Purchase, will extend liability in environmental, product, and tort liabilities) to a contracts case, but my understanding is that that would certainly be the exception rather than the norm.

While there are somewhat compelling public policy arguments for wanting to provide physically injured parties (tort and products liability cases) with a remedy (i.e., provide them with someone to sue), and while there are even more compelling public policy arguments for wanting to provide a remedy for environmental disasters, I don't necessarily see the same public policy urgency for wanting to help out the aggrieved skiers.

I sympathize with them, but I think it will probably boil down to a reading of the original contracts and unless they were able to negotiate for some sort of clause in that contract that guaranteed the contract even in the event of an Asset Purchase, they may be out of luck, unless the court is willing to extend the doctrine past, imo, its intended reach.

Just my .2 cents. I really don't know how this will play out.