Southwest Value Partners took over the Westin La Paloma and a South Carolina resort as part of the Chapter 11 bankruptcy reorganization of the resort's former owners, which were affiliate companies of Transwest Partners/NCH Corp.
Transwest Partners, a company managed by Michael J. Hanson and Randall G. Dix, purchased the Westin La Paloma and the Westin Hilton Head Island Resort & Spa in South Carolina in 2007, taking on massive debt to pay for the properties.
With the economic meltdown, occupancy shrank and hotel operators slashed room rates.
Unable to pay back $240.5 million in mortgage debt, the owners faced foreclosure. In November 2010, Transwest's affiliate companies - including Transwest Resort Properties Inc., Transwest Tucson Property LLC and Transwest Hilton Head Property LLC - filed for Chapter 11 bankruptcy protection.
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The bankruptcy court has since valued the two properties at $92 million.
Under the terms of the bankruptcy plan, Hanson and Dix lose their ownership stakes in the resorts. Also, the resort owners' senior lender will receive the full amount of its claim - $247 million - paid over 21 years, said Susan Boswell, the debtors' bankruptcy attorney.
Even so, the senior lender has appealed U.S. Bankruptcy Judge Eileen Hollowell's approval of the plan, with attorneys for the lender arguing that it violates bankruptcy code.
On Tuesday, U.S. District Judge Raner C. Collins denied the senior lender's request that the plan - which allowed Southwest Value Partners to take ownership of the bankrupt companies - be put on hold while that appeal makes its way through the court.
With Southwest Value Partners having already taken over the resorts, what, if any, effect that appeal has yet to be decided.