Former Passholders Ask Court for Class Action Certification Against Killington

[ComeBackMudPuddles]

BTW, that nice couple who sued Powdr over the lifetime thing cause they paid $26,000 in 1996 for two of them lost miserably in court a couple of months ago. The Vermont AG had no interest in getting involved. Legal enough for ya. On WCAX the lady even admitted that they knew that they had no chance of winning but they sued cause they could. Powdr spokesperson said on camera that they are considering countersueing them to recoup all legal costs.

Who cares what the Vermont AG thinks? My guess is that there was a bit of a conflict of interest involved (big money interests/local economies/lobbying dollars against passholders' rights).

Who cares what the Powdr spokesperson thinks? Of course that person would spin things that way.

Anyway, your post sounds to me more like anti-lawyer bashing than addressing the merits of the passholders' case.

Powdr got off on a technicality (probably rightly), just like your garden variety criminal who wasn't read his miranda rights (also probably rightly).

 

[SkiDork]

BTW, that nice couple who sued Powdr over the lifetime thing cause they paid $26,000 in 1996 for two of them lost miserably in court a couple of months ago. The Vermont AG had no interest in getting involved. Legal enough for ya. On WCAX the lady even admitted that they knew that they had no chance of winning but they sued cause they could. Powdr spokesperson said on camera that they are considering countersueing them to recoup all legal costs.

Do you have a link to any sort of info about this? I hadn't heard anything about this. Thanks.

 

[MichaelJ]

This is why ski resorts these days make vouchers / passes / coupons / etc. explicitly non-transferrable (see other thread). If the lifetime passes were really for only the original buyers, this story would be long since over.

 

[SkiDork]

No, that isn't a draft. That's the agreement. The sale was closed in March, and the money changed hands in May, but it was based on the agreement they entered into Feb 16th.

From their 10-Q filing for March 1st:

"On February 16, 2007, we entered into a definitive purchase agreement with SP Land Company, LLC (“SP Land”) to sell substantially all of the assets comprising the Killington/Pico ski resorts in Killington, Vermont. The purchase price to be paid for the Killington/Pico resort by SP Land is $83.5 million in cash plus the assumption of approximately $5.0 million in debt and other liabilities. The purchase price is subject to certain customary adjustments, including certain season pass and working capital adjustments, set forth in the Purchase Agreement. A closing escrow of $3.0 million will be withheld from the purchase price until July 1, 2008, to fund any post-closing indemnification obligations of the Seller."

check your PM.s

 

[MichaelJ]

Were the passholders compensated?

Actually, I believe that anyone who paid $1,000 for an original pass has long since been more than compensated by Killington (under any ownership).

If someone paid someone *else* big bucks to transfer one of these passes, well, their purchase "contract" was with that person, not with the ski resort, right?

 

[SkiDork]

Actually, I believe that anyone who paid $1,000 for an original pass has long since been more than compensated by Killington (under any ownership).

If someone paid someone *else* big bucks to transfer one of these passes, well, their purchase "contract" was with that person, not with the ski resort, right?

no.

 

[ComeBackMudPuddles]

Actually, I believe that anyone who paid $1,000 for an original pass has long since been more than compensated by Killington (under any ownership).

A deal is a deal.

 

[Tin Woodsman]

A deal is a deal.

Really? Is this the extent of your legal analysis?

If "a deal is a deal" please illuminate us with respect to your view on who was the counterparty to the "deal" entered into by the owners/purchasers of the lifetime passes?

 

[Geoff]

Let's try a non-skiing example....

I buy a lifetime membership at a health club in town. That business rents their space but they own the exercise equipment. The health club shuts their doors but without declaring bankrupcy. Somebody comes along and buys the exercise equipment, signs a new lease with the building owner, and opens up a new health club at the same location. I'm S.O.L. with my lifetime membership. It's a contract with a different business. If I took the new business to court, any judge in the land would throw it out. I could take the old business to court and try to get some of my money back but their pool of money is likely pretty small so I wouldn't expect to get much.

Substitute season pass for membership, ski resort for health club and you have the Killington situation. The lifetime passes were a contract with Sherburne Corp. That is a wholly owned subsidiary of the American Skiing Company. There's a $3 million escrow account for the sale of Killington people could go after though that probably vanishes pretty soon unless they can convince a judge to lock it up. If they want to chase them in Utah, there may very well be other assets that haven't vanished yet like the proceeds from selling The Canyons. Doing it in federal court is smart because it makes it easier to chace ASC assets in Utah.

The new owners don't have any legal obligation to honor a contract with a corporation wholly owned by the American Skiing Company. The State of Vermont was stupid to write POWDR a new lease rather than force them to buy Sherburne Corportation that held the original Killington lease. If you want to have a public flogging, nail the bureaucrat in Montpelier who screwed all the lifetime pass holders.

I've been through this with Dork before but the financial issues of ASC were pretty well known at the time he bought his lifetime passes. We all make bad financial investments once in a while. I have a pile of near-worthless Alcatel-Lucent stock that was once worth a very nice chunk of change. If you want safe, buy gold and stick it under your mattress. In the grand scheme of things, a couple of lifetime passes going away isn't going to pose a huge financial hardship.

 

[SkiDork]

which is why ASC and their 3 million dollar escrow account is named as a party in the suit...

 

[Geoff]

which is why ASC and their 3 million dollar escrow account is named as a party in the suit...

Yep. ...and I think you guys have a reasonable claim on that money. After you pay off the lawyers and divide the rest up among all the lifetime pass people, I doubt it will amount to much.

 

[Tin Woodsman]

Yep. ...and I think you guys have a reasonable claim on that money. After you pay off the lawyers and divide the rest up among all the lifetime pass people, I doubt it will amount to much.

Seems to me that ASC and that escrow fund are the only legitimate targets of that suit. Not sure how anyone could concoct an argument that POWDR, however venal they are, are in some way liable. I'll be surprised if this isn't thrown out.

 

[ComeBackMudPuddles]

Seems to me that ASC and that escrow fund are the only legitimate targets of that suit. Not sure how anyone could concoct an argument that POWDR, however venal they are, are in some way liable. I'll be surprised if this isn't thrown out.

Both purchaser and seller were aware of the debt to the lifetime passholders and contracted around it to cut out the passholders in order to make their deal more acceptable to themselves.

Let's say I own a startup (like a young Killington), I get a whole bunch of investors to take a risk in return for a stake in the company (like a lifetime pass), but I then sell the company to another person (Powdr) for a lower price than I need to (allowing Powdr to get Killington on the cheap) and walk away not having compensated my investors.

I would think Powdr would have some liability for having knowingly entered into a contract to defraud the lifetime passholders.

 

[madskier6]

Both purchaser and seller were aware of the debt to the lifetime passholders and contracted around it to cut out the passholders in order to make their deal more acceptable to themselves.

Let's say I own a startup (like a young Killington), I get a whole bunch of investors to take a risk in return for a stake in the company (like a lifetime pass), but I then sell the company to another person (Powdr) for a lower price than I need to (allowing Powdr to get Killington on the cheap) and walk away not having compensated my investors.

I would think Powdr would have some liability for having knowingly entered into a contract to defraud the lifetime passholders.

Your analysis is flawed in several respects. Powdr owes no obligation to the lifetime passholders when negotiating the contract to buy K. The obligation is with ASC. It's up to ASC to take care of the lifetime passholders. Powdr didn't "defraud" the lifetime passholders since they owed them nothing.

As to your hypothethcal, your investors would be stockholders & they have certain rights by law. If you sold the company on the cheap, the stockholders would still receive a portion of the proceeds after all the debt was paid off (or assumed by the buyer). They would just get less than they could have gotten. So they would be compensated to some extent.

By law, the stockholders would have the right to approve the sale transaction so if they don't object to the terms & nevertheless approve the deal, tough luck for them. If they are minority shareholders who couldn't have stopped the sale, they have something called appraisal rights under law that would entitle them to receive "fair value" for their shares.

 

[Tin Woodsman]

Both purchaser and seller were aware of the debt to the lifetime passholders and contracted around it to cut out the passholders in order to make their deal more acceptable to themselves.

Let's say I own a startup (like a young Killington), I get a whole bunch of investors to take a risk in return for a stake in the company (like a lifetime pass), but I then sell the company to another person (Powdr) for a lower price than I need to (allowing Powdr to get Killington on the cheap) and walk away not having compensated my investors.

I would think Powdr would have some liability for having knowingly entered into a contract to defraud the lifetime passholders.

Uh, no. And you're changing your argument as the inadequacies of your original thoughts are laid bare.

1) How many of those who are a party to the suit are the original investors who took the risk with this start up?

2) As others have pointed out, isn't it likely that in the 30-40 years since those passes were issued that the original investors have been compensated many times over in light of where pass prices are, or for those who sold their passes, via a substantial cash payment from the buyer?

3) Asset sales happen all the time for a variety of reasons. I'm not sure why POWDR didn't just do a stock purchase, though I have to wonder whether it was primarily related to the fact that both Mt. Snow and K-Mart were part of Sherburne Corp, Such a situation would make a stock deal much more complicated and the asset deal would have been the natural alternative rather than a course specifically chosen to get out from under the lifetime pass obligation.

Geoff's health club example was dead on, and you responded with some pithy comment like "a deal's a deal". If that's the extent of your argument on this, then you need to stop wasting people's time and the admin's bandwidth arguing here, b/c it's clear you really don't know what you're talking about.

 

[ComeBackMudPuddles]

Uh, no. And you're changing your argument as the inadequacies of your original thoughts are laid bare.

1) How many of those who are a party to the suit are the original investors who took the risk with this start up?

2) As others have pointed out, isn't it likely that in the 30-40 years since those passes were issued that the original investors have been compensated many times over in light of where pass prices are, or for those who sold their passes, via a substantial cash payment from the buyer?

3) Asset sales happen all the time for a variety of reasons. I'm not sure why POWDR didn't just do a stock purchase, though I have to wonder whether it was primarily related to the fact that both Mt. Snow and K-Mart were part of Sherburne Corp, Such a situation would make a stock deal much more complicated and the asset deal would have been the natural alternative rather than a course specifically chosen to get out from under the lifetime pass obligation.

Geoff's health club example was dead on, and you responded with some pithy comment like "a deal's a deal". If that's the extent of your argument on this, then you need to stop wasting people's time and the admin's bandwidth arguing here, b/c it's clear you really don't know what you're talking about.

Are you serious? Time to get over yourself.

Anyway, your points 1 and 2 have no substantive value (the passes were transferable and one doesn't get to stop honoring a deal just because the other side, in your mind, got more than it deserved....in other words, yes, quite simply, a deal is a deal).

My point, which you and the health club example don't address, is that, in the case of the health club, the equipment was financed by the memberships, and, in the case of Killington, its development (which was not assured and was a risky undertaking for the investors) was financed by the passholders, so, when the purchaser knowingly contracted with the seller to defraud the creditors of their interest in the business, it should have incurred some sort of liability (OK, I admit, I don't know if, under Vermont law, they DO have any liability, but I think they should).

This isn't very complicated and reasonable people should be able to differ, so I don't understand why you're getting all worked up about this. My only explanation is that you are a tool.

 

[thetrailboss]

Are you serious? Time to get over yourself.

My only explanation is that you are a tool.

Gentlemen, let's drop the ad hominem attacks please and focus on the actual points, which would be the merits of a class action suit.

 

[tcharron]

Gentlemen, let's drop the ad hominem attacks please and focus on the actual points, which would be the merits of a class action suit.

I personally think one of the larger merits is, the purchase agreement with the SEC specifically said, they would need to be honored, and the clause was indefinite. Now perhaps they changed the language after the fact, but I don't see how. All of the SEC filings have stated they entered into agreement February 16th. That's the date on the SEC purchase agreement. The only exception that was stipulated was a posible price adjustment based on 'unnamed season passes'. A price adjustment. If the clause that they need to honor it was stricken, (IANAL) they would need to have filed the amended agreement with the SEC, which never happened. So far, I haven't seen anyone produce the supposed 'final' agreement, and until that time, all anyone has to go on is the SEC filing.

 

[Tin Woodsman]

Are you serious? Time to get over yourself.

Anyway, your points 1 and 2 have no substantive value (the passes were transferable and one doesn't get to stop honoring a deal just because the other side, in your mind, got more than it deserved....in other words, yes, quite simply, a deal is a deal).

My point, which you and the health club example don't address, is that, in the case of the health club, the equipment was financed by the memberships, and, in the case of Killington, its development (which was not assured and was a risky undertaking for the investors) was financed by the passholders, so, when the purchaser knowingly contracted with the seller to defraud the creditors of their interest in the business, it should have incurred some sort of liability (OK, I admit, I don't know if, under Vermont law, they DO have any liability, but I think they should).

This isn't very complicated and reasonable people should be able to differ, so I don't understand why you're getting all worked up about this. My only explanation is that you are a tool.

Your explanation pretty much spells out the value you bring to this subject. I'm not worked up at all - simply annoyed when people try to simplify issues (about which they understand little) into empty pleas regarding what they believe is "right" and "wrong", or worse, "should be".

As for the health club example, I'm not sure how it doesn't fit. Who is to say that some if not all of that equipment was financed by the lifetime memberships? How does that change the equation at all? Do those investors have a lien on the equipment? Is it your contention that so long as some sort of health club is in that space, then it is the obligation of the new owners to honor the promises of a company that hasn't existed for possibly decades?

What "should be" is irrelevant, and rightly so, in the eyes of the law. This is b/c "should" is inherently subjective. I haven't seen a copy of the Purchase Agreement, but I'd be shocked if the lifetime pass obligation was the only liability that POWDR chose not to assume. Were the counterparties to those other liabilities "defrauded" as well? As Geoff mentioned, perhaps there is some reasonable claim against ASC and its escrow fund. As for POWDR, as much as I think they are clowns, this suit is completely baseless.

 

[tcharron]

What "should be" is irrelevant, and rightly so, in the eyes of the law. This is b/c "should" is inherently subjective. I haven't seen a copy of the Purchase Agreement, but I'd be shocked if the lifetime pass obligation was the only liability that POWDR chose not to assume. Were the counterparties to those other liabilities "defrauded" as well? As Geoff mentioned, perhaps there is some reasonable claim against ASC and its escrow fund. As for POWDR, as much as I think they are clowns, this suit is completely baseless.

The SEC filing serves as the 'notification' that it's taking place, and the SEC filing specifically had it listed. If the SEC filing didn't have it, then the lifetime pass holders could have said 'Hold on a second SEC, there's something not addressed here'. Specifically, who had the liability of the passes. At that point they could have gone after ASC for their liability. The announcement that it wasn't the new owners came after the point where the lifetime pass holders could have done anything about ensuring their liability was properly secured.