bankruptcy

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Original Message:

Re: bankruptcy (by Doug P.):

I spoke with a rep. from SWM this afternoon after having posed about a dozen questions on the French Quarter website. Hopefully I was able to get a lot of my questions cleared up.

As to buildings 8 and 9, deeds were never issued. The contractor who built building 8 was never paid, put a lien on the building and was able to foreclose. It is not part of the trustee sale and apparently not part of the bankruptcy. Once it was foreclosed on the doors were locked and it is now unoccupied. The land and the building are no longer a part of French Quarter and SWM no longer manages the building.

Those that pre-purchased in building 9 are actually in the same position. They own nothing. As it stands now building 9 will never be built. For that matter I believe it's safe to say that there will be no more additions to the property.

The court trustee has done a poor job communicating with everyone and has made mistakes. One mistake was listing property in the trustee sale that could not be listed. For instance, there was additional land that Brian Taylor had purchased with a bank loan. The bank had foreclosed on the land and had resold it. The trustee had listed it in the trustee sale, someone objected (probably the bank) and the judge to the trustee they better get their stuff together.

Those in buildings 1 to 7 should have deeds and business should go on as normal.

Grand Regency got pulled into this because there was unsold inventory that the developer used to obtain loans.

While Southwind is the management company now, they might not be after the trustee sale is complete. Southwind is considering bidding on the property but, if they don't win the bid, they'll likely be out as management and whomever does win the bid will be in or, will decide who to hire as management.

If SWM doesn't win the bid this could be very bad for those who bought into buildings 8 and 9. SWM has allowed those buyers to pay MF's and has provided inventory for their use. While there is no guarantee, the person I spoke with feels that SWM will make arrangements to help those owners. After all, any management company wants owners who pay the MF's. What help they would give, if any, is an unknown and not guaranteed.

If another management company or developer wins the bid I think it's safe to say that the buyers of buildings 8 and 9 may simply be out of luck. The company has filed bankruptcy so that's probably not an option. Perhaps they could go after the principle owner of the company but, as I understand it, he's bankrupt as well. If that's true then there is nowhere to turn and it's just a very bad investment loss, sort of like owning stock in a company that no longer exists.

The land the original sales office was located on was never owned by French Quarter LLC. I had assumed there was trouble and the insurance money from the building got put into someone's pocket. That was wrong. I did not ask but I'm assuming the resort is currently renting the building for it's registration desk.

The Copper Tree hotel, which was sold as a benefit to owners for inexpensive nightly rentals, was also never owned by French Quater LLC. As most of you know, it was closed a couple of years ago, sat empty and has since been raised.

With luck the trustee sale will close in the next three months and we'll all have a better idea where the resort stands. I know I'll be glad to put this entire situation behind me.