KERHONKSON – In yet another example proving how difficult it is to run a resort in the region these days, the Hudson Valley Resort and Spa, formerly known as the Granite Resort, filed for Chapter 11 bankruptcy on January 7, 2010. According to bankruptcy court documents, the resort owes over $22.5 million to six lenders for six mortgages, taken out by property owner Eli Spitzer's company Everyday Logistics, LLC, in 2006 to purchase the resort from the Minnewaska Company, LLC, the latter being owed roughly $2.5 million for its loan to Spitzer. The company also owes about $770,000 in unsecured debt to its list of creditors, including many local businesses in and around the region.

In addition to facilitating Spitzer's purchase of the property, it was reported in 2007 that the funding was also to go toward creating a brand-new 18-hole golf course on the resort's grounds designed by professional golfer Vijay Singh. But plans for the golf course, and a slew of other improvements to the resort, got shelved in the face of the now-infamous financial crisis from 2008.

"A basic assumption underlying Everyday's payment obligations was the expectation and belief that there would not be a global economic meltdown that would devastate the hospitality business and freeze mortgage credit availability; particularly for domestic hotel resort development," read court documents outlining the company's predicament. Essentially, the company blames its inability to pay back its lenders on the credit freeze that has plagued businesses over the last year or so.

"But for the existence of the credit crisis, Everyday would have obtained the refinancing it sought, which was necessary, inter alia, to pay the amounts due under the agreements to the Lenders," says the filing.

In addition to the six mortgage lenders, the company owes money to smaller-sized businesses in the region, such as Duso Food Distributors and Freskeeto Frozen Foods in Ellenville, Hornbeck's Plumbing and Heating in Wawarsing, and Hudson Valley Internet in New Paltz. The company owes $4,500 to Perfect Computer Solutions in New Paltz, $29,000 to SYSCO Food Services of Clifton Park, and $ 39,145 to the Town of Rochester for property taxes.

Despite the debts that have piled up on the property, Spitzer and his management still plan on keeping the resort open and doing business as usual. Requests made to Spitzer for comment were politely rebuffed on Tuesday.

"I can't really comment on anything, I'm sorry," said Spitzer regarding the bankruptcy filing. "Right now the operation is…moving forward, and there's no disruption in that. Once everything is complete, when we settle all the other matters in terms of the debt on the property, then I'll be happy to make some kind of statement to that end. Right now the hotel is operational, running as it was until now. Nothing has really changed."

Confirming Spitzer's statement that the resort is still operating normally, according to General Manager Orest Fedash, the resort hosted a group of nearly 700 people this past President's Day weekend, with each room in the hotel booked.

"[Many] weekends we are completely sold out," said Fedash on Monday, regarding the resort's operations outlook. "We're ahead in contracts signed for 2010…. I'm going to be ahead…compared with 2009."

Filing for Chapter 11 bankruptcy allows a corporation in debt to continue operating while the company's organization is restructured, and the courts make decisions regarding which creditors will get paid what amounts. This differs from Chapter 7 bankruptcy, which calls for a business to be liquidated and its creditors paid through the sale of the company's assets.

While it may be too soon to say how much money the six lenders will end up receiving of their $22.5 million investment in the property, it's likely that many of the smaller businesses will get little to none of the money that they're owed when all the dust settles.

"I'm sure it's going to hurt everyone that they owe," said one local business due money by the resort.

A meeting of creditors has been scheduled to convene at United States Bankruptcy Court in White Plains on Wednesday, March 3 at 1 p.m.