The highest of two bids for the 800-acre plus Aspen Valley Ranch, which was advertised for $220 million in May 2020, came in at $28.5 million during a privately conducted virtual auction on Wednesday, according to bankruptcy court records.
The winning bid was placed by the lenders who initiated a foreclosure action on the ranch property in March, citing an outstanding debt of $88.2 million, an amount that has since grown past $100 million with interest. The loan was given to Charif Souki, who developed the property and pledged it as collateral.
Aspen Valley Ranch, however, declared Chapter 11 bankruptcy in late July, icing the lenders’ run at a foreclosure auction in Pitkin County.
An auction was held nonetheless this week and conducted by Aspen Valley Ranch following months of written and oral arguments in the bankruptcy case about the terms of the auction and bidding process.
As secured creditors, the lenders prevailed in the closed auction with a “credit bid,” meaning that amount would be applied to the balance owed by Souki, who led a group of investors that bought the ranch for $27 million in 2013, before it was developed into a family retreat and a neighborhood of luxury homes.
The sale still needs approval from the judge who is presiding over the case in the Houston Division of the U.S. Bankruptcy Court in the Southern District of Texas. Schedule changes to the auction bumped the sale hearing to Thursday, but it was postponed once again until Oct. 11.
A Souki family spokesperson did not return a message regarding the ranch ownership’s next step.
To authorize the sale, the judge will need to find that the auction was conducted within the agreed-upon bidding procedures between the lenders and Aspen Valley Ranch, the auction was fair, the winning bid was a qualified bid, and that the sale “will provide the highest or otherwise best offer for the Debtors and the Ranch and is in the best interests of the Debtors and their estates,” according to bankruptcy records.
Aspen Valley Ranch and Strudel Holdings, an investor in the ranch, had been fighting in bankruptcy court over the lenders’ participation in the auction. The parties agreed to a condition that would allow the lenders to place a credit bid if a non-lender bid came in below $40 million at auction.
That is what happened at the bankruptcy auction, where an entity called the Fleeger Family First LP placed the first bid, for $28 million, on the ranch. The lenders answered with a $28.5 million bid, which was good enough at the end. Fleeger Family First will serve as the back-up bidder if the auction deal with the lenders fails to materialize, according to court records.
Aspen Valley Ranch and Strudel could request a hearing on the credit bid, but that was unclear Thursday. Houston lawyer Joshua Wolfshohl, whose firm Porter Hedges LLP is representing the ranch during the bankruptcy proceedings, confirmed in an email message that the sale hearing will be held but he did not address a question about their position on the lenders’ credit bid.
Souki and investors bought the 800-plus acres for $27 million in 2013. The Souki family developed the property into their family retreat, which includes 13,900 square feet of common space that comprises a ranch house, a gym/pool house and a historic barn with a game room and eight horse stalls, according to marketing materials for the property.
In May 2020, they listed the property for sale with a price tag of $220 million.
Two ranch homes were individually sold in 2021, according to Pitkin County property records. Those homes were not included in this week’s auction.
A limited liability called Beyond the Beach paid $31.5 million for a 4,700-square-foot home on the ranch’s 45-acre lot 8 and another LLC, Three Dolphins, acquired lot 4, also with a home (5,069 square feet on 35 acres), for $15.5 million in August 2021, according to property records.
The ranch is located near Woody Creek and boasts a collection of luxury custom-built homes, a fishing and boating pond, a historic barn converted into a clubhouse sporting a dining area and recreation center, an eight-horse barn and other amenities.
The winning bid came from a group of lenders and affiliates comprising Nineteen77 Capital Solutions of New York, Bermudez Mutuari Ltd. of the Cayman Islands, Chicago-based UBS O’Connor LLC and Delaware-based Wilmington Trust National Association.
Souki also pledged Ajax Holdings, a real estate holding company based in Aspen that owns the Coldwell Banker Mason Morse firm, as collateral against the loans. The same lenders have attempted to auction off the assets of Ajax Holdings.
Souki is fighting the sale of Ajax Holdings in the Supreme Court of the State New York, where he has claimed his loans were overcollateralized and the lenders dumped stock in a Houston-based liquid-natural gas firm he founded, Tellurian, at cut-rate prices earlier this year. Souki also pledged 25 million shares in Tellurian stock as collateral for the loans, according to court filings.
The New York case has been on pause until the bankruptcy case is resolved.
Rick Carroll | Aspen Daily News | October 6, 2023