Big Burke announcement

[wtcobb]

Some nice transparency in posts on Jay's facebook page:

Sorry we took a few extra minutes reaching out folks. As you may have heard, we here at Jay Peak will be working with Leisure Hotels and Resorts (LHR) to continue managing Jay Peak same as it ever was. Current ownership is working with state and federal officials surrounding their ongoing investigation relative to the EB5 Foreign Investment Program. That process is distinct and not connected to the day to day operations of the mountain, indoor waterpark, golf course, lodging or any of our amenities that continue to be available on a daily basis here. Our longtime CMO Steve Wright has recently been named General Manager and he, along with LHR will be responsible for the day to day operations of the resort.
We are anticipating our busiest summer on record with music, conferences, almost 70 weddings and a host of other business segments and we look forward to keeping on. It is an awkward time for us on the ground as well and we appreciate you giving us some room to figure all of this out. We will absolutely keep you in the loop as this takes more shape and appreciate your support as we move toward a much more sustainable future. We will be operating for skiing and riding this week and through the weekend with Ski School reopening for Sat. April 16th and have decided to continue operations through next week, weather permitting on both sides of the mountain, through the 24th. We’ll take a look at conditions thereafter and make a call about going for May.
Again, thanks so much- we appreciate your support more than you know.




Replies to the comments are also very upfront about the situation. Obvious optimism and PR spin here, but not shying away from the bad news either. A well-handled post, IMO.

 

[wtcobb]

Other convo from Jay:

Didn't mean to be obtuse there Andrew sorry. The SEC has appointed LHR to run the resort with Steve (Wright). Personal assets of Bill and Ariel are frozen, they are still considered the owners and are working with State and federal officials-they just don't have any day to day management authority.

Thanks Erik. We can definitely understand how people are upset and confused. At some level, we are as well. Hope springs eternal though.

 

[wtcobb]

I wouldn't count on financial improvements from LHR:

http://www.leisurehotel.com/services/distressed-asset-management/

A similar holding company for distressed assets (albeit different vertical) bought out EMS. That's turned out well...

 

[VTKilarney]

Here is the editorial that ran in the April 7th Caledonian Record:

Standing With Burke

A rash of recent headlines suggest serious trouble for the various EB-5 development initiatives of Bill Stenger and Ari Quiros.

As we wrote in a February comment:

The new hotel and conference center at Burke Mountain is ready to open after recently receiving state Certificates of Occupancy.

But unpaid bills to general contractor Jerry Davis are keeping doors to the impressive new facility closed.

Grand openings have been repeatedly delayed as developer Bill Stenger has dealt with never-ending series of setbacks. Those headaches have exacerbated the financial torment of a calamitous lack of snow and visitors this winter.

Meanwhile a whole bunch of local people anxiously await the possibility of new jobs and opportunities at the mountain.

The problem started two years ago when a small handful of foreign investors complained to the state after experiencing some buyer’s remorse. They weren’t complaining about their newly minted green cards - the crown jewel of the EB-5 program - just that they suddenly believed the totally legitimate, above-board deal they willingly signed should somehow be made sweeter.

They got upset when Bill Stenger and Ari Quiros dissolved “Jay Peak Hotel Suites, LP,” the legal entity created to build the resort’s Tram Haus lodge. With the move, 35 limited partners (each who invested $500,000) lost investor status. In exchange, they got promissory notes, backed by the value of the resort.

The state of Vermont’s EB-5 Regional Center, as one might expect from a state agency dealing with complex issues, pretty much had no idea what was going on. They looked totally foolish when their advice to the disgruntled investors was essentially “call Bill Stenger… he’s such a great guy.”

The investors were confused. Vermont’s highest ranking pols (Governor Peter Shumlin, Senators Patrick Leahy and Bernie Sanders, and Rep. Peter Welch) were crawling over each other to take credit for Stenger and Quiros’ successes. So how was it, with such a suddenly high profile program, that Vermont’s only regulatory body appeared to be no more than glorified cheerleaders?

Well if there’s one thing bureaucrats and politicians hate, it’s being outed as buffoons. The political class, few of whom have ever built companies or created jobs, started whispering about fraud, corruption, conspiracy, ponzi schemes, dirty capitalists, end-of-the-world, etc. And the way they always deal with that kind of thing is to invent ways to show the world how tough, smart and useful they can be.

Typically that spells death for free enterprise.

The state made a couple of statutory changes and focused its vast, taxpayer-funded focus and energy into regulating Stenger, et al. That meant that the men who created thousands of jobs, and on whose coattails Governor Shumlin rode so boastfully for years, suddenly had to answer to a handful of pencil-pushers before they could write checks or tie their shoes.

No big surprise… with their hands tied, Stenger and Quiros have since been beset by headaches, setbacks and delays.

The biggest irony? The foreign investors who turned to the state years ago because they “lost confidence” in Stenger and Vermont’s ability to control him, were really just looking for ways to safeguard their money. By summoning the “power” of the state, those pigeonhearts put otherwise solid investments into serious jeopardy.

We didn’t think there were “guarantees” in the investment world. We thought it worked like this: do your homework, pick a strong company, caveat emptor, and place your bets.

For our money, we would have stuck with the guys who turned an obscure federal program into $650 million in local investments over Montpelier desk-jockeys who’ve never created anything in their lives.

Not everyone agrees with us. We still hear a lot of people calling Stenger and Quiros ponzi schemers who were under-capitalized and have nobody to blame but themselves. Those folks tend to hold the state faultless in handicapping area projects in the 11th hour.

We simply don’t understand that thinking. The Northeast Kingdom is home to 18 of the 25 poorest towns in Vermont, according to a recent paper by renowned economist Art Woolf. Barring anything illegal, it’s in everyone’s interest that these projects succeed. That’s less likely to happen if people continue to root against wannabe job creators and defend the bureaucrats steadfast on sabotaging progress.

 

[SIKSKIER]

I doubt whether Jay operations will be effected much except for some customer apprehention/cancelations.Everybody involved wants Jay to still run as it has.It serves nobody for Jay to be shut down or severly injured.

 

[BenedictGomez]

Here is the editorial that ran in the April 7th Caledonian Record:

Whoever wrote that is a simpleton moron.

They don't just have egg on their face, the entire chicken coop landed on their face.

 

[thetrailboss]

I find it very hard to believe how Ary can now remain at the helm. His Dad is in serious trouble. Ary needs to pack up and move now.

 

[VTKilarney]

I find it very hard to believe how Ary can now remain at the helm. His Dad is in serious trouble. Ary needs to pack up and move now.

He can't. The receiver isn't that stupid.

 

[DoublePlanker]

I doubt whether Jay operations will be effected much except for some customer apprehention/cancelations.Everybody involved wants Jay to still run as it has.It serves nobody for Jay to be shut down or severly injured.

I would think that the operating company might have a tighter budget. If Jay operations are truly profitable, then likely nothing to worry about.

 

[oldtimer]

Never, never bet against the stupidity of someone in that business. I have had several vendors go chapter 7 over the years and had bankruptcy receivers/trusstees do things that were so far beyond stupid as to be criminal. In one case we had to go to the judge and my attorney told her that the trustee refused to release goods that were 100% paid in full, although the work was not finished. The judge asked the trustee why, and his response was that he felt we needed the goods enough that we would pay more than the contract amount. The judge then explained to the trustee (an attorney) that her court was not in the extortion business.

He can't. The receiver isn't that stupid.

 

[thetrailboss]

The full press conference:

http://www.wcax.com/story/31725401/...y-peak-q-burke-owners-committed-massive-fraud

 

[HowieT2]

There will not be a quick resolution, this will probably drag out for a few years.

agreed. they used the eb5 investor money to buy Jay so this will all have to be litigated before a new owner can take over.

 

[thetrailboss]

And once again Vermont is proving that it is a popular place for embezzlement, fraud, etc. So very sad.

 

[HowieT2]

And once again Vermont is proving that it is a popular place for embezzlement, fraud, etc. So very sad.

c'mon, you think vermont has more fraud than other states? please.

 

[yeggous]

c'mon, you think vermont has more fraud than other states? please.

Seriously. Has he been to New Jersey?

 

[oldtimer]

RHODE ISLAND -- no contest.

 

[stomachdoc]

agreed. they used the eb5 investor money to buy Jay so this will all have to be litigated before a new owner can take over.

Such an unfortunate situation; my heart goes out to the residents of the NEK who must be very distressed by the abrupt end to a significant economic opportunity there. I always enjoyed skiing at Burke (although haven't been there since the "Q" was added... )I wonder what plans are being made at BMA at this juncture since it's unlikely that the mountain will operate next year; these are not quickly resolved legal matters.

 

[VTKilarney]

My prediction (and I've been pretty damn good so far):
Federal indictments for Quiros, Stenger, William Kelly and Joel Burstein. These people are listed in the order of "screwed," starting with the most screwed. Kelly and Burstein will flip. Perhaps Stenger too if they feel that they need him.

 

[yeggous]

RHODE ISLAND -- no contest.

You have a point.

 

[VTKilarney]

my heart goes out to the residents of the NEK who must be very distressed by the abrupt end to a significant economic opportunity there.

Many (most??) of the construction workers were not local. The jobs that remained after construction were very low paying and often seasonal. It's not as big of a hit as it may appear.