Summit Powder Mountain lawsuit against lenders survives termination effort | News, Sports, Jobs


BRIAN NICHOLSON, Special for the Standard Examiner

In this undated photo, construction can be seen in the Summit area of ​​Powder Mountain Ski Resort.

Federal judge has refused to dismiss a complaint filed by Summit Powder Mountain against groups of lenders he accuses of defrauding the Utah resort in connection with a $ 120 million development loan deal .

Summit Village Development Lender 1 LLC had asked U.S. District Judge Bruce Jenkins in Salt Lake City to dismiss the resort’s lawsuit, which was filed in August after lenders served the resort with a $ 51 million loan default notice. dollars.

But in a brief ruling released on Monday, Jenkins rejected the dismissal request. The resort, under the corporate name Summit Mountain Holding Group, accuses lenders of fraud and breach of contract and in good faith.

The station has agreed to drop two causes of action against a second lender, Grand Canyon Development Holdings 3 LLC, but Jenkins has ruled that the remaining lawsuit against it will stand for the time being.

Lenders must now file formal responses to the lawsuit by Dec.6, Jenkins said.

The loan litigation concerns the planned development of Summit Village, an estimated $ 207.2 million centerpiece of the Summit Group’s vision to transform the resort town near Eden into a paradise for thought leaders, influencers , business titans, artists and artists.

Resort general manager Mark Schroetel said in August that the loan dispute would not stop development. He said the resort is looking for replacement lenders. Other parts of the resort’s development continued, including housing developments around the village core.

The village is a 4-acre area that can include commercial, restaurant and retail space, high-density housing such as condos or townhouses, as well as a hotel and event space.

In 2016, Summit Mountain Holding Group, acting as guarantor of the project development entity SMHG Village Development, entered into loan agreements with Summit Village Development Lender 1 LLC and Grand Canyon Development Holdings 3 LLC. Court records show that the latter two entities are controlled by Hong Kong-based Celona Asset Management.

On July 6, Celona sent a notice of default stating that Summit defaulted on the $ 120 million loan and owes $ 51.3 million plus $ 360,600 in interest. The loan was for five years and Celona said in the notice that Summit must already have completed construction.

But in its lawsuit, Summit accused the lenders of breach of contract by failing to deliver the loan proceeds on time and sending no more than $ 42 million by 2019 million.

Summit further accused the lenders of using the remaining $ 78 million raised for the loan on other projects – even after Summit responded to requests from lenders to get participation in a fundraising event by the basketball star Kobe Bryant.

Because lenders would have pulled the rug from under the project, Summit has been deprived of at least $ 50 million that the project would have generated to date, so it cannot repay the $ 42 million received, according to the lawsuit. .

The lending entities say they are made up of 81 Chinese nationals who, by contributing to US-based projects under the federal EB-5 program, can acquire permanent green cards. An individual must invest $ 500,000 in an American project that creates jobs.

Investors are “in pursuit of the American dream” and the visa that goes with it and they expect only nominal profits, according to the response to the lawsuit.

The 81 investors “seek to leave the People’s Republic of China for a better life in America,” and their investment has helped create new jobs, according to the document. Summit Powder Mountain, on the other hand, he said, “is an upscale real estate developer who is building a multi-hundred million dollar luxury ski resort and looking to populate it with some of the celebrities, millionaires. and billionaires of the world “.

The lenders say the requirements of the loan program are unambiguous and that Summit’s lawsuit “is a desperate effort to avoid its absolute, unconditional and irrevocable obligations.”

Newsletter

Join the thousands of people who already receive our daily newsletter.


Comments are closed.