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Saturday, June 25, 2011

Peek'n Peak trustee: Resort is 'healthy'

By ED PALATTELLA, Erie Times-News
Eighteen years ago, David O. Simon learned how to ski at Peek'n Peak Resort and Spa, near Findley Lake, N.Y.
This week, Simon, a veteran bankruptcy lawyer in Cleveland, started preparing the Peak for a sale in U.S. Bankruptcy Court in Cleveland in September.
Just as he has enjoyed the Peak as a skier, Simon said he has good feelings about the future of the ski and golf complex, whose Cleveland-area parent company filed for Chapter 11 bankruptcy 13 months ago.
"It is a healthy resort," Simon said. "The place has a heartbeat, a strong heartbeat. It needs the right kind of operator to give it some tender loving care and to bring it back."
As trustee, Simon is overseeing the Peak and arranging for its sale at a public auction, which he said he wants to occur by the end of September. Proceeds from the sale will go to the Peak's creditors, none of which is expected to recover all its losses.
U.S. Bankruptcy Judge Randolph Baxter, seated in Cleveland, on Monday approved the trustee appointment of Simon, 61, a lawyer for 37 years. Simon assumes oversight of the operations of the Peak from Paul E. Kiebler IV, a real estate developer from Chardon, Ohio, east of Cleveland.
Kiebler had controlled the resort as the owner of Kiebler Recreation LLC, which bought the Peak from the Cross family, of Waterford, in January 2006.
Kiebler Recreation filed for Chapter 11 protection in May 2010, declaring debts of $28 million. That includes what is now more than $17 million owed to Huntington National Bank, Kiebler Recreation's main mortgage holder and the primary secured creditor for the Peak's property.
Huntington and the other creditors earlier this month petitioned for the appointment of a trustee, claiming that Paul Kiebler was mismanaging the Peak. They also said he failed to come up with a Chapter 11 plan for Kiebler Recreation to reorganize, settle its debts and retain ownership of the Peak.
Simon, who is regularly appointed a bankruptcy trustee, visited the Peak on Saturday and will work out of his office in Cleveland, where he runs his law practice. His trusteeship fees will come out of the bankruptcy estate of Kiebler Recreation.
The Peak remains in business, with its president, Robert Swenson, and about 300 employees on the job. The Peak's workforce grows to about 1,000 in winter.
"My function is essentially the same as upper management," Simon said. "I oversee the operation of the resort and anything related to it."
Kiebler Recreation fell into unmanageable debt as it borrowed to buy the Peak and expand the condominiums on the 1,150-acre resort, which opened in 1964.
Since it filed for bankruptcy, the Peak has recorded $16 million in sales and other revenue but lost $2.7 million after paying operating expenses and professional fees related to the bankruptcy, according to court records.
"I think it perhaps tried to grow too big, too fast, which created a capital shortage," Simon said of the Peak. "That is not uncommon. We see that all the time."
He said a "healthy" number of prospective buyers have contacted him, though the list is confidential at this stage.
A new owner, Simon said, will need to infuse the Peak with cash but should also have the advantage of carrying a reasonable debt load.
Baxter set a Sept. 1 deadline for the sale of the Peak. Simon said he now expects the sale to occur by Sept. 30.
"We recognize the seasonal nature of the resort," Simon said. "The timing of the sale is optimal between golf season and ski season. We don't want to do it in the middle of either season."
ED PALATTELLA can be reached at 870-1813 or by e-mail.

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