Lawyers, bankers, accountants, investors, creditors and other interested parties are awaiting a ruling from a Houston bankruptcy judge that supposedly will determine the future ownership of the Aspen Valley Ranch gated community once and for all.
A group called Chiron AVR LLC was declared the winning bidder of a late-October bankruptcy auction for the luxury property, but it claimed a data breach prevented it from closing on the $30.5 million deal’s Nov. 22 deadline set by Judge Chris Lopez of the U.S. Bankruptcy Court of the Southern District of Texas.
The back-up bidder, Fleeger Family First, has claimed it became eligible to buy the property because Chiron AVR missed the closing deadline, which was a breach of the sale agreement authorized by Lopez.
After presiding over a hotly contested hearing held Monday, Lopez faces one of two decisions: One, he can stick with his previous ruling from Dec. 27 that allowed the sale to be postponed without any penalties due to the data breach. Alternatively, Lopez can rescind that order, which effectively would put Fleeger Family First in the position to buy the ranch.
The victim of the data breach, which was the result of a cyberattack, was Fidelity National Title Insurance Co., the title company and escrow holder in the transaction. The company’s systems were down until at least Nov. 22 through Nov. 28, making it impossible to close on the sale, Lopez said in his ruling from December.
A lawyer for the Chiron AVR LLC, the winning bidder, called this week’s hearing a “colossal waste of time and money” for all the parties involved.
“The cyber attack was both extraordinary and surprising, and it prevented the secured parties from closing on the ranch November 22,” argued lawyer Darrell Cafasso at the hearing this week. “And, your honor, this is a court of equity and the equities here weigh heavily in favor of the secured parties. As the court well knows by now, the ranch is the secured parties’ collateral for a 100-plus-million-dollar loan that has not been repaid.”
Chiron AVR is an LLC of lenders and affiliates that last year initiated foreclosure steps on the property, which was pledged as collateral on personal loans taken out by businessman Charif Souki. Souki and some investors bought the property for $27 million when it was a mostly undeveloped ranch in 2013, and the Souki family made it a family retreat with luxury homes, outdoor equipment and vehicles, horse stalls, a gym/pool house and other amenities.
Cafasso argued that the backup bidder was making a run at the ranch so it could sell it for a quick profit. Matthew Fleeger, a Texas oil and gas executive who controls Fleeger Family First, is “only interested in purchasing the ranch so he can flip it and double his money,” Cafasso said. “The secured parties, on the other hand, are trying to recoup some of the many millions of dollars that they are still owed. This ranch was pledged to them as collateral many years ago.”
Lawyer Barrett Reasoner, arguing for Fleeger, said Chiron AVR “made choices here. They chose not to close. They chose not to close before there was any knowledge of the Fidelity data breach.” Reasoner cited Chiron AVR’s notice of default it filed in the bankruptcy case on Nov. 21 — one day before the closing deadline date — against Aspen Valley Ranch. The default notice, which sought a one-week extension on the sale deadline, alleged the ranch owed more than $1 million in homeowners association dues.
“This was a no-go before November 22, before they found out about the breach,” Reasoner said.
Fleeger Family First filed a pleading on Dec. 30 that said while “the cyberattack on Fidelity was an unforeseen event that was outside the control of any party, it was not why the sale did not close by November 22, 2023. The sale did not close by the deadline for two primary reasons: (1) lack of diligence by the Secured Parties; and (2) the Secured Parties’ last-minute accusation of the Debtors’ default related to HOA fees.”
The filing called Chiron AVR’s Nov. 21 notice of default on the HOA fees “a strategy to seek more money from the Debtors (Aspen Valley Ranch ownership),” adding that was “the most likely reason the sale did not close by the deadline.”
Two entities, including one that owns Aspen Valley Ranch, declared Chapter 11 bankruptcy in Houston on July 27, one day before a foreclosure sale was scheduled in Pitkin County District Court. Souki, who controls both entities, purportedly made a fortune in the liquid natural gas industry. He also was the original owner of Mezzaluna restaurant in Aspen.
Aspen Valley Ranch covers more than 800 acres and is located in Woody Creek about 10 miles northwest of Aspen.
The pending sale of Aspen Valley Ranch will not include two ranch homes on the property, both of which were sold in 2021 to private entities: Beyond the Beach LLC paid $31.5 million for a 4,700-square-foot home on the ranch’s 45-acre lot 8 and Three Dolphins LLC 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.
By: Rick Carroll | Aspen Daily News I January 25, 2024
