Download - PCDOCS-#309162-v3-Status Report and Agenda - April 27 …09-22030 through 09-22043, hereby submits his Agenda and Status Report for the Omnibus Hearing on April 27, 2010. Case 09-22035-lbr

::ODMA\PCDOCS\PCDOCS\309162\3 - 1 -

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SULLIVAN, HILL, LEWIN, REZ & ENGEL Electronically Filed: April 23, 2010 A Professional Law Corporation

James P. Hill, CA SBN 90478 (Pro Hac Vice) Christine A. Roberts, NV SBN 6472 Elizabeth E. Stephens, NV SBN 5788

228 South Fourth Street, First Floor Las Vegas, NV 89101 Telephone: (702) 382-6440 Fax Number: (702) 384-9102 Attorneys for Chapter 7 Trustee, William A. Leonard, Jr.

UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEVADA

In re CONSOLIDATED RESORTS, INC., et al.,

Debtor.

) ) ) ) ) ) ) ) )

CASE NO. BK-S-09-22035-LBR (Lead Case) (Jointly Administered with Case Nos. 09-22030 through 09-22043) Chapter 7

Affects: All Debtors Destinations Unlimited, LLC, 09-22030 Consolidated Realty, Inc., 09-22031 Consolidated Media, LLC, 09-22032 CRI Travel Holdings, LLC, 09-22033 Consolidated Resorts Travel, LLC, 09-22034 Consolidated Resorts, Inc., 09-22035 Consolidated Maui, Inc., 09-22036 Consolidated Kona, Inc., 09-22037 Lahaina Ticket Company, Inc., 09-22038 Soleil PS, LLC, 09-22039 Soleil LV, LLC, 09-22040 Consolidated Tahiti, Inc., 09-22041 Consolidated Orlando, Inc., 09-22042 Consolidated Tickets, LLC, 09-22043

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

AGENDA AND STATUS REPORT FOR OMNIBUS HEARING ON APRIL 27, 2010 Date: April 27, 2010 Time: 9:30 a.m. Ctrm: LBR - Courtroom 1 Foley Federal Building 300 Las Vegas Blvd. South Las Vegas, NV 89101 Judge: Hon. Linda B. Riegle

William A. Leonard Jr., the Chapter 7 trustee (“Trustee”) in the Consolidated Resorts, Inc.

related bankruptcy cases, BK-S-09-22035-LBR (Lead Case), jointly administered with case numbers

09-22030 through 09-22043, hereby submits his Agenda and Status Report for the Omnibus Hearing

on April 27, 2010.

Case 09-22035-lbr Doc 373 Entered 04/23/10 17:14:36 of 14

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0922035100517000000000001


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I.

AGENDA FOR HEARING

The matters presently set for hearing on April 27, 2010 include the following:

1. Trustee’s Objection to Claims of Nevada State Bank Relating to Liens on Vehicles

and on Miscellaneous Personal Property with Certificate of Service (filed in Lead Case No. 09-

22035 as Docket No. 225). The Trustee made interim distributions of sale proceeds to both Nevada

State Bank and to the mechanics’ lien creditors, and the parties continued the matter to this hearing

date pursuant to stipulation and order (entered in Lead Case No. 09-22035, as Docket No. 347).

Since the time of the last hearing, the parties have agreed that the Trustee may take his formal claim

objection off calendar in light of the probable satisfaction in full of the claims of Nevada State Bank

that will occur on closing of sales of the bulk of the estates’ assets. A proposed stipulation and order

to this effect has been circulated to counsel for Nevada State Bank.

2. Interim Application for Compensation for Sullivan Hill Lewin Rez & Engel, Fees

(“Sullivan Hill”) for fees and cost through December 31, 2009: $786,753.00, Expenses: $1,548.44

(filed in Lead Case No. 09-22035 as Docket No. 313). This fee application is unopposed. At the

March 18, 2010 hearing, this Court made a preliminary interim approval of Sullivan Hill’s Fee

Application in the interim amount of $300,000.00. The firm will request at this hearing an

additional partial advance of $100,000 and for payment of its $1,548.44 in costs, plus authorization

to draw down and be paid $52,209 in funds that were earmarked and reserved from collateral of

various secured creditors by multiple stipulations and orders (as detailed in Sullivan Hill’s fee

application and highlighted below), in light of its continuing extensive services and application of

the firm’s resources, and more importantly in light of the enormous progress that has been made

toward getting to final resolutions in these cases.

II.

PROCEDURAL BACKGROUND

On or about July 7, 2009 (“Petition Date”), each of the 14 Consolidated Resorts, Inc.

affiliated debtors (each a “Debtor,” and collectively, the “Debtors”) filed a voluntary petition for

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relief with this Court under Chapter 7 of the Bankruptcy Code (11 U.S.C. § 101 et seq.). On July 8

and July 10, 2009, the Trustee was appointed as the Chapter 7 trustee for each of the Debtor estates.

On August 21, 2009, the Court entered an order authorizing and directing the joint

administration of all 14 cases, a copy of which was served on all creditors by the Trustee’s Court-

approved noticing agent, Kurtzman Carson Consultants (“KCC”).1

On August 26, 2009, the Court entered an order limiting notice in these cases, a copy of

which was served on all creditors by KCC.

At the Trustee’s direction, KCC launched a dedicated website for these cases, which can be

accessed online at http://www.kccllc.net/consolidatedresorts. There, the Trustee posts updates about

the cases, including case status reports and other important pleadings and updated dockets for the

cases.

III.

THE ESTATES’ ASSETS

The Trustee has investigated and analyzed the most significant assets of these Debtor estates,

most of which (in terms of gross dollar amount) constitute collateral of secured creditors, but many

of which are unencumbered and which will provide the basis for distributions to general unsecured

claims out of various estates. The assets as a whole include extensive timeshare note portfolios

consisting of notes payable by purchasers of timeshare interests in resorts developed and operated by

various Debtors and their related entities.

These bankruptcy estates do not include ownership of the timeshare resorts themselves. The

Trustee has worked cooperatively with the timeshare resorts management companies, the several

secured creditors which hold collateral interests in timeshare assets, and ASNY, the debtors’

principal investor and equity interest holder, all with an aim to keep the timeshare resorts open and

operational, and very significantly, to make sure that the timeshare owners have timeshare resorts

that can be used without limitation or interference from these bankruptcy cases. This cooperative

effort has had the salutary effect of keeping more than 100,000 timeshare owners and their potential

1 The Trustee has not yet determined if there will be a need for a claims agent in the estates generally, or in any specific case. If the Trustee makes such a determination, he will seek court approval to retain KCC to act as claims agent. The Trustee has instructed KCC to file any and all claims received by it with the Court to be docketed by the Clerk.



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claims “outside” these cases. It has also maintained value in the core unencumbered assets of the

estates while at the same time preserved the values of the secured creditors’ timeshare asset

collateral.

Other assets of these debtor estates include remaining undeveloped and partially developed

real property interests (e.g., the Kauai Sands Hotel and undeveloped Palm Springs raw land

property); recovered or otherwise unsold timeshare units; certain reserved rights of the Debtor

estates as “developers” and as “declarants” of various timeshare resorts; and general intangible

property rights, software, and related computer software equipment owned by various Debtors.

Additionally, the Trustee is working with ASNY to obtain turnover to the Trustee of funds and

proceeds from security deposits that were posted pre-petition for now-cancelled marketing bonds

(which the Trustee is informed are approximately $1.8 million), and which should be returned to the

estates free and clear of liens.

Since his appointment, the Trustee has worked with representatives of the Debtors and their

principals, including ASNY, who have been cooperative and forthcoming with the Trustee. Such

representatives have provided access to documents and other information to the Trustee and the

Trustee’s professionals that are essential to (i) the ongoing, albeit limited, operation of the Debtors’

businesses by the Trustee, as authorized by Court order; and (ii) the disposition of estate assets in a

fashion intended to maximize potential distributions to unsecured creditors, as described below.

IV.

SERVICING OF ACCOUNTS RECEIVABLE

Prior to the Petition Date, the Debtors handled internally all customer service functions, as

well as “collection” of its large timeshare notes receivable portfolios. On the Debtors’ behalf,

Concord Servicing Company (“Concord”) handled “servicing” of the notes receivable.2

Immediately prior to the Petition Date, the Debtors ceased their in-house collection services.

After his appointment, following consultation with all of the secured creditors, the Trustee

sought and obtained Court approval to retain Concord to handle all servicing and some collection

2 “Servicing” of notes receivable refers to the work involved in collecting accounts in good standing. “Collection” of notes receivable refers to the work involved in collecting delinquent accounts.



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work -- on both encumbered and unencumbered accounts. Under the Court-approved arrangements,

all of the secured creditors who held liens in the timeshare note portfolios (inclusive of GMAC,

HSBC, Textron and Liberty Bank) have advanced to the estates the fees and costs for services

provided by Concord, including certain of the Trustee’s and Trustee’s counsel’s fees and costs.

Substantial funds have been collected through this process -- by both secured creditors and

the estates. The Trustee will provide the Court a report of those collections in open court on April

27, 2010.

V.

LIMITED BUSINESS OPERATIONS BY THE TRUSTEE

Throughout these cases, the Court has entered various orders authorizing the Trustee to

conduct limited operations of the Debtors’ businesses designed to preserve asset values while

winding down the Debtors’ business operations and liquidating assets in an orderly manner. The

Trustee has maintained collection efforts and resolved pending sales and foreclosure actions,

including working with escrow companies and collateral control agents for the secured creditors on

reconveyances, timeshare upgrade sales, and closing escrows that were pending at the time these

bankruptcy cases were filed. His efforts encompass both “house” timeshare interests, as well as

encumbered interests (if and to the extent secured creditors consent). The current authority for the

Trustee’s limited operation of the Debtors’ businesses remains in place through May 15, 2010. The

Court authorized the Trustee to seek further extensions of the limited operations authority by oral

motion from time to time at continued status conference, which the Trustee intends to renew again in

open court at the April 27, 2010 hearing to a date that will be approximately 15 days after the next

continued omnibus hearing in these cases.

VI.

SECURED CREDITORS' RELIEF FROM STAY MOTIONS

The Trustee has worked cooperatively with all secured creditors in an effort to review and

analyze timely and efficiently their respective loan and security documentation and perfection, and

to resolve the various relief from stay motions filed.

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The Trustee determined that GMAC Commercial Finance, LLC (“GMAC”) fully and

adequately documented and perfected its various loans and security agreements. Accordingly, the

Trustee stipulated to GMAC’s request for relief from stay, which stipulation was approved by two

separate orders of the Court entered August 7, 2009 and September 14, 2009, respectively. See

Docket Nos. 80 and 147 in Lead Case No. 09-22035.

The Trustee likewise determined that HSBC Bank USA, National Association (“HSBC”)

fully and adequately documented and perfected its various loans and security agreements.

Accordingly, upon the Trustee’s motion, the Court entered an order on March 22, 2010 authorizing

the Trustee’s abandonment of HSBC’s collateral, which has now taken place, subject to some wrap

up accounting with Concord and the Trustee which is ongoing.

Textron and Liberty Bank also hold security interests in timeshare note portfolios of the

Debtors. The Trustee has worked with both entities and their counsel similarly to resolve issues with

respect to the adequacy and validity of their respective loan and security interest documentation and

perfection, and to determine the ultimate value of their respective note collateral portfolios when

collected out over time. Liberty Bank’s portfolio continues to be collected at a relatively fast rate, its

claim has been reduced substantially and it may be paid in full in relatively short order. The Trustee

has reached an agreement in principle with Textron that will lead to resolution of its claims and sales

of the two non-timeshare parcels of real property that serve as partial security for its claims in these

cases. This agreement is being reduced to a written stipulation that will be submitted to the Court

for review and approval on a noticed motion basis.

VII.

EFFORTS TO SELL THE DEBTORS’ ASSETS

A. GMAC Marketing Stipulation

On March 18, 2010, the Court approved an “Amended Stipulation” between the Trustee and

GMAC, under which the parties agreed to a coordinated process under which unencumbered estate

assets will be marketed in conjunction with GMAC collateral. Upon closing of a sale of its

collateral, GMAC will pay to the estates 0.5% of the aggregate gross value of the proceeds of such

sale, plus $250,000. This provision will ensure that unsecured creditors do not pay the costs of



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liquidating GMAC’s collateral, but rather enjoy the possible upside of surplus funds -- over and

above the costs of liquidating GMAC collateral -- being paid to the estates. Furthermore, by

marketing unencumbered estate assets in conjunction with the GMAC collateral, a higher sale price

has been achieved for the unencumbered assets than could have been realized without a coordinated

sale process, thereby benefiting the estates and unsecured creditors.

B. Proposed ASNY Sale

The Trustee, GMAC and The ASNY Company, LLC (from the outset in these cases, the

most logical and probable buyer of the estates’ assets, if their value could be preserved) entered into

a Letter of Intent (“LOI”) which provides for ASNY’s purchase, subject to overbid by qualified third

party bidders, of certain assets of the estates. The ASNY LOI provides for a total purchase price of

$18,951,590 for the assets to be sold, subject to overbid. Approximately half of the assets to be sold

(expressed in terms of total sales price) are encumbered by security interests of GMAC which has

consented to the sale pursuant to the terms of the GMAC Amended Stipulation noted above. A very

few of the assets are subject to the secured claims of Nevada State Bank (the remaining unpaid

secured claims of which will be paid in full at closing). More than $6,000,000 of the sale proceeds

will be paid to the Debtor estates for the sale of unencumbered assets that are free and clear of

security interests of secured creditors in these cases. (As an aside, the assets to be sold pursuant to

the ASNY asset purchase agreement, subject to overbid, expressly do not include (a) “current” or

performing timeshare notes that are encumbered by GMAC’s security interests, or (b) certain

timeshare and real estate assets associated with the Debtors’ Regal Palms resort property in Orlando,

Florida, among certain other “excluded assets” that will be dealt with separately and are not the

subject of the ASNY asset purchase agreement.) In addition to the estates’ share of the sale proceeds

for its unencumbered assets, another approximately $295,000 will be paid to the estates by GMAC

under the terms of Amended Stipulation (a $250,000 fixed amount plus another .5 percent of the

selling price of the GMAC collateral to be sold through a section 363 sale process). These funds are

not “earmarked” for secured creditors, but rather will represent “free” unencumbered cash of the

estates to be added to funds recovered and to be recovered from other sources, thus benefiting the

estates and their general unsecured creditors. The parties have worked to turn the ASNY LOI into a



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definitive asset purchase agreement, and believe they are poised to execute that agreement any day.

Once the agreement is executed, the Trustee will file a section 363 sale motion seeking approval of

the sale as contemplated by the recently approved Amended Stipulation between the Trustee and

GMAC, as signed off by both ASNY and the timeshare resorts’ management companies.

C. Textron Marketing Stipulation

As noted above, following extensive negotiations among the Trustee and Textron, the

Trustee and Textron have entered into a stipulation which provides for, among other things: (i) the

establishment of a joint marketing and sale program for the Kauai Sands Hotel and an undeveloped

parcel of real property in Palm Springs, California, in both of which Textron holds interests; (ii) the

orderly transitioning to Textron of certain accounts receivable in which Textron holds valid and

perfected security interests; and (iii) the payment to the estates of a portion of the net sale proceeds

realized upon a sale or other disposition of Textron’s collateral. Textron is undersecured, and no

equity exists in the assets for the benefit of the estates. The assets constituting Textron’s collateral

were deemed by the Trustee to be not essential to selling the Debtors’ businesses as ongoing

concerns, and likewise their disposition does not affect the non-debtor timeshare resorts or their

many timeshare owners. Thus, the assets are being sold separate and apart from the majority of the

estate assets constituting collateral of GMAC and the estates’ unencumbered assets. The stipulation

ensures that unsecured creditors do not bear the costs of liquidating Textron’s collateral, while

allowing unsecured creditors to enjoy some small potential upside in terms of surplus funds received

above costs of sale. Unsecured creditors benefit further from the stipulation in that Textron will be

releasing 50 percent of its deficiency claims -- thus enriching potential distributions to other

unsecured creditors which otherwise would be shared with Textron.

VIII.

LEASES

Numerous leases to which the Debtors were party have been rejected by operation of law,

pursuant to Bankruptcy Code section 365(d)(1). The Trustee permitted lessors of rejected personal

property leases to recover what he determined in his reasonable business judgment to be unnecessary

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equipment of minimal value (such as leased equipment trailers, copiers, postage machines and the

like).

The Trustee determined that several of the leases to which the Debtors were party might be

of value to the estates. Accordingly, he filed a motion pursuant to section 365 of the Bankruptcy

Code requesting that the Court extend his time to assume or reject three real property leases: the

Kauai Sands ground lease; the Consolidated Resorts, Inc. Co-Location Agreement; and the Soleil

LV, LLC Lobby Building lease.

On December 18, 2009, upon the Trustee’s motion, the Court entered an order extending

through and including February 2, 2010 the Trustee’s time to assume or reject these leases. See

Docket No. 269. Pursuant to a stipulation with the Trustee, Niu Pia Land Company Ltd. and

Textron, an order was entered on January 20, 2010 extending the time to assume or reject the Kauai

Sands ground lease through and including August 2, 2010. See Docket No. 290.

Pursuant to a stipulation with the Trustee and Switch Communications Group, LLC , an order

was entered on February 1, 2010, extending the time to assume or reject the Consolidated Resorts,

Inc. Co-Location Agreement through and including August 2, 2010. See Docket No. 295.

Pursuant to a stipulation with the Trustee and ASNY, an order was entered on February 1,

2010 extending the time to assume or reject the Soleil LV, LLC Lobby Building lease through and

including June 2, 2010. See Docket No. 296.

The Trustee expects that he will enter into further stipulations with the parties to these leases

to further extend the time to assume or reject them as may be appropriate and necessary to close the

transaction contemplated under the GMAC Amended Stipulation (i.e., for the sale of assets to ASNY

or an overbidder), and under the soon-to-be-submitted Textron stipulation (i.e., for the sale of the

Kauai Sands hotel property). No other real property leases or executory contracts were deemed

necessary or valuable to the estates and creditors by the Trustee or by the affected secured creditors

and they were accordingly rejected by operation of law.

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IX.

SALE OF VEHICLES AND EQUIPMENT

The Trustee sold at auction certain vehicles and equipment not necessary to his continued

limited operation of the Debtors’ businesses. Most of the estates’ vehicles and miscellaneous non-

essential personal property and equipment were sold (expressly not including any of the Cornerstone

computer system and related software). Nevada State Bank asserts liens on various vehicles and

certain furniture, fixtures and equipment of some of the Debtors. The Trustee filed an objection to

the bank’s lien claims on the furniture, fixture and equipment and on certain vehicles on November

2, 2009 (Docket No. 225). The Trustee shared his accounting and report of sale with Nevada State

Bank and the mechanics’ lien creditors, and he paid out pro rated sales proceeds pursuant to prior

stipulations with Nevada State Bank and the mechanics’ lien claimants.

In light of the ASNY LOI that has been signed, and the fact that the parties are in the very

last stages of documenting the ASNY asset purchase agreement based on that LOI which provides

for the sale of the lion’s share of the estates’ unencumbered assets and the assets that are the subject

of Nevada State Bank’s liens, which will pay off all of Nevada State Bank’s lien claims in full, the

Trustee is confident that the issues with respect to his objections to the Nevada State Bank lien

claims will be moot and the claims objections will not need to be addressed by this Court.

Accordingly, with the stipulation and agreement of Nevada State Bank, the Trustee intends to take

his objections to the bank’s claims off calendar, subject to the objections being re-noticed and re-

calendared at a later time if for some unforeseen reason the sale to ASNY or an overbidder is not

concluded in a manner that would allow the Trustee to pay the bank in full.

X.

INSURANCE

The Trustee has worked cooperatively with representatives of the Debtors as well as with

affected secured creditors to maintain insurance coverage on all real estate assets of the estates. The

Trustee also worked with Nevada State Bank to ensure that the estates’ vehicles and other personal

property which were secured by the bank’s liens were insured until sold at auction.

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XI.

EXPEDITED RESOLUTION OF LAHAINA TICKET COMPANY ESTATE

The estate of Lahaina Ticket Company (“Lahaina Ticket”) is smaller and less complex than

the estates of the other Debtors. The Trustee believes that an expedited resolution of this estate may

be possible, in a fashion which avoids protracted litigation involving the conflict between Hawaiian

state trust law and bankruptcy law and which will allow dollars to be paid in an expedited fashion to

this estate’s creditors. The Trustee is currently engaged in discussions with counsel representing the

vast majority of creditors in the Lahaina Ticket estate, as well as with counsel for the bank holding

the funds which represent the bulk of the assets of the Lahaina Ticket estate. The Trustee has

circulated among the parties a proposed stipulation establishing a claims process and distribution

procedure for the expedited resolution of this estate, and the involved parties are currently engaged

in settlement discussions to implement this process. Once the stipulation is approved by the parties

and their counsel, the Trustee will present that agreement to the Court for approval.

XII.

KAUAI SANDS EASEMENT STIPULATION

The Trustee was approached by the Niu Pia Land Company, Ltd. (“Niu Pia”), the fee owner

and ground lessor of the Kauai Sands Hotel property, to cause Consolidated Maui, Inc., the ground

lessee of the property, to enter into a stipulation for the grant of bike path and utility pole easements

over the property. The Trustee believes that doing so will not diminish the value of the Kauai Sands

property, but rather will preserve it. On that basis, the Trustee (through counsel) negotiated separate,

written grants of easement for the bike path and relocated utility pole with the proposed easement

recipients, and entered into a stipulation for the grant of such easements (“Easement Stipulation”)

with Niu Pia and Textron Financial Corporation, the mortgagee under a mortgage on Consolidated

Maui’s leasehold interest in the Kauai Sands property.

On March 4, 2010, the Trustee filed a Notice of Stipulation Regarding Grant of Easements

and Opportunity to Object and For Hearing to provide an opportunity for hearing any opposition to

the proposed grants of easement at the next omnibus hearing date on March 18, 2010. Following the

filing of such Notice, the Court entered an order on March 8, 2010 approving the Easement



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Stipulation. No objections to the stipulation were raised, and the Trustee has delivered the executed

grants of easements.

XIII.

INTERIM FEE APPLICATION

The Court indicated it would consider further review and approval at this hearing of the

interim application of the Trustee’s counsel, Sullivan Hill, for allowance of its fees and costs

incurred through December 31, 2009. [First Interim Fee Application of Sullivan, Hill, Lewin, Rez &

Engel for Payment of Fees and Reimbursement of Costs, Docket No. 313]. As indicated above, the

Sullivan Hill firm is asking at this time for an additional partial interim award of $100,000, plus the

fees and costs that have been earmarked and are reserved by the Trustee pursuant to the terms of

several stipulations between the Trustee and third party secured creditors to be paid from proceeds of

the secured creditors collateral, consisting of an additional $52,209 through December 31, 2009.

These earmarked fees and costs to be paid pursuant to prior stipulations and orders of this Court

were identified in the firm’s fee application (at Fee Application pages 10-14 as to the four separate

stipulations relating to Concord Servicing collections, and at pages 19-20 as to the two Nevada State

Bank stipulations regarding various estate vehicles and regarding the estates’ furniture, fixtures and

equipment) and are part of, but not additional to, the firm’s total $786,753 first interim fee

application. These earmarked fees and costs to be paid pursuant to the stipulations are summarized

here as follows:

GMAC Concord Servicing Stipulation $14,468.00

HSBC Concord Servicing Stipulation $ 2,946.50

Liberty Bank Concord Servicing Stipulation $ 2,245.00

Textron Concord Servicing Stipulation $ 3,265.00

NSB Vehicle Stipulation $21,588.50

NSB FF&E Stipulation $ 7696.00

TOTAL: $52,209.00



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Finally, Sullivan Hill also respectively requests that the Court approve and allow the Trustee

to pay the firm its $1,548.44 in costs identified in its interim fee application. Thus, although

Sullivan Hill’s full interim fee request is for $786,753 plus $1,548.44 in costs, of which $300,000

has been allowed for payment on an interim basis, the firm is asking at this time, with the Trustee’s

consent and approval, for an additional allowance and approval on an interim basis of $152,209 in

fees and $1,548.44 in costs. The firm has dedicated an enormous amount of time, resources and

expense to these cases and the cost of carrying the cases as long as it has without current payment

has been extremely difficult and a burden on the firm. Nevertheless, Sullivan Hill is pressing

forward as quickly as events and the other parties involved in the case and the underlying

transactions will allow. Accordingly, Sullivan Hill requests that the Court award it additional partial

fees and its costs on an interim basis, subject to review and further order of the Court at a later time.

XIV.

MOVING FORWARD

As noted above, enormous progress has been made toward the sale of the core unencumbered

assets of these estates along with certain assets that constitute some, but not all, of the collateral of

GMAC, and soon hereafter of the real property collateral of Textron. This process has been a

coordinated and cooperative effort among the Trustee and secured creditors. The goal of the Trustee

and his professionals has been to get the Debtors’ assets to market and sold in as timely a fashion as

practical under the circumstances, with the least disruption and adverse effect on the timeshare

resorts and their many (more than 100,000) timeshare owners who remain outside of these cases,

retaining full use and enjoyment of their timeshare resorts. The Trustee believes that his approach

has and will provide a return of the greatest value for the most people affected by these bankruptcy

cases, and ultimately will realize the greatest possible distributions to unsecured creditors. Had the

Trustee not taken this approach, he believes that there likely would have been serious disruption of

services at the timeshare resorts, and timeshare owners likely would have stopped paying on their

timeshare notes and timeshare maintenance contracts, and would have filed enormous claims for

damages in these cases. Instead of taking a contrary approach with catastrophic and far reaching

consequences, the parties (including ASNY, the timeshare management companies, GMAC,



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Textron, various other creditor parties, and the Trustee and his professionals) have worked

cooperatively, albeit at times not always eye to eye, thereby preserving maximum value under the

/ / /

circumstances not only in the estates’ core assets, but also in the secured creditors’ large and

valuable note portfolios and other collateral bundles. In the end, all parties are benefiting.

As the Trustee proceeds in his administration of these cases, he and the major parties in

interest will continue to cooperate to keep all of the non-debtor timeshare resorts operating

independently, without interruption of services for the benefit of the more than 100,000 timeshare

owner, and in so doing will return maximum value to the estates and their creditors.

Dated: April 23, 2010 SULLIVAN, HILL, LEWIN, REZ & ENGEL A Professional Law Corporation

By: /s/ James P. Hill James P. Hill Christine A. Roberts Elizabeth E. Stephens Attorneys for Chapter 7 Trustee, William A. Leonard, Jr.


Case 09-22035-lbr Doc 373-1 Entered 04/23/10 17:14:36 Page 1 of 7