Judge approves $31M deal to keep resort operational

Editor's Note: This story has been updated from a previous version.

BY ERIKA NORTON
VERNON — A federal judge approved Mountain Creek Resort Inc.'s request to access a $31 million financing package on Tuesday, allowing the resort to continue ongoing operations.
The package approved by Federal Court Bankruptcy Judge Stacey Meisel will consist of $6 million in funding provided by the current owners, a Koffman family entity, along with a $25 million loan from M&T bank for ongoing resort operations.
The company filed for Chapter 11 bankruptcy protection on Monday.
“Judge Meisel’s ruling (Wednesday) is an important step toward putting Mountain Creek back on the road to success and profitability,” Jeff Koffman, CEO of Mountain Creek Resort, said ina statement. “This approval will allow us to continue to meet our obligations to our employees, vendors and customers as we work through this process and reemerge as the premier four season resort in the area.”
According to the court filings, Mountain Creek owes over $26 million in contractually obligated payments to the Vernon Township Municipal Utilities Authority. They also owe $885,000 in payments to Crystal Creek Associates, a financing firm associated with the Crystal Springs Resort in Hamburg, among other creditors.
Since 2010, more than $30 million was invested in Mountain Creek, according to a statement released by then-Mountain Creek Resort President Bill Benneyan. And when the Koffman family bought the resort just two years ago in June 2015, new owner Jeffrey Koffman said he envisioned investing about $50 million of capital into the resort over the next five years, part of which can be seen in the expanded Mountain Bike Park.
The ski area celebrated it’s 50th anniversary in 2015 as well.
Vernon Township’s sewer system is currently facing a cumulative debt of over $35 million. It is unclear how the restructuring of Mountain Creek’s debt will affect the township, or whether the debt owed by Mountain Creek will fall on Vernon sewer ratepayers.
“Mountain Creek is claiming as I’ve read that they want to be part of the community, they want to help the community, and to walk away from that debt, it would have to be spread out,” Vernon Mayor Harry Shortway said Wednesday.
Shortway also said the township will be hiring additional bankruptcy counsel to protect the township’s interests during the proceedings.
Will remain openAccording to the press release, the resort will continue to operate fully during the bankruptcy process. And if approved in New Jersey Bankruptcy Court, the debtor-in-possession financing, along with the company’s cash from operations, is expected to provide enough to support its continuing business operations and allow all staff-member jobs to remain.
The Waterpark is set to be open the weekends of June 10 and June 17, with the park opening seven days a week starting June 22.
Along with the filing, Mountain Creek filed a number of “first-day” motions with the court to minimize the disruptions to any business operations and facilitate a smooth transition into Chapter 11. The motions request authorization to honor employee pay and benefits along with certain customer programs currently in place, such as seasonal pass holders, Triple Play cards and gift cards. Customer deposits for weddings and other events will also be honored.
Mountain Creek Resort, Inc. has retained Lowenstein Sandler as legal advisors, along with Getzler Heinrich LLC as financial advisor and Houlihan Lokey to assist with the valuation and restructuring of its balance sheet.