One of the shared bunkrooms inside The Pad, a hotel and hostel in Silverthorne. (BusinessDen file)
After being accused of collusion, the owners of a bankrupt hotel and hostel in Silverthorne have abandoned plans to sell it to an investor for $10.1 million, half of its appraised value.
The Pad opened in November 2021 at 491 Rainbow Drive after 20 months of construction. It has 36 rooms and 101 beds, plus meeting rooms, decks with hot tubs and an independently owned bar. Its founders are the husband-and-wife duo Rob and Lynne Baer.
The Pad’s construction was funded by a $12.3 million loan from BRMK Lending out of Seattle and $2.8 million from Lever Capital in New York. When the Baers were unable to repay, The Pad was placed in receivership last September. It went bankrupt the next month.
On Aug. 15, Blue Rhino Investments agreed to pay $7.5 million for it and assume $2.6 million of the Lever loan. BRMK was to receive $6.6 million from the sale — half of the $13.3 million that The Pad says BRMK is owed and far less than the $18 million BRMK says it is owed.
BRMK and three other entities that are creditors of The Pad took issue with that sale.
“Blue Rhino is not a good faith purchaser but rather a party conspiring and in collusion with the debtor’s principals to the disadvantage of creditors,” a group of unsecured creditors wrote to a bankruptcy judge last month. “Debtor has devised a scheme with an insider for the benefit of debtor’s principals, the Baers, rather than exercise its sound business judgment.”
The creditors called it “a sham transaction” that would allow the Baers to stay on as managers of The Pad. They accused the Baers of ignoring a higher bid in early September to ensure that Blue Rhino and its owner, Stephen Caragol of Steamboat Springs, won out.
In their own objections to the sale, BRMK and Himmelman Construction — the latter has a $733,000 mechanic’s lien on The Pad — raised questions about the price, noting that the Baers had previously cited a 2022 appraisal that valued The Pad at $20.3 million.
“Even more alarming, The (Pad)’s owners stand to personally gain in connection with the sale, as Blue Rhino will employ the Baers as managers,” Himmelman noted. The Lakewood construction company didn’t like that it would have received no proceeds from the sale.
The Pad is a hybrid hotel and hostel at 491 Rainbow Dr. in Silverthorne. (Courtesy The Pad/David Lauer)
Keri Riley, a bankruptcy lawyer for The Pad, explained at a hearing Wednesday that the Baers and BRMK had an agreement this year whereby BRMK would not move forward with a foreclosure if the Baers could find financing or sell the property before mid-October.
“Unfortunately, the debtor’s refinancing efforts did fall through. So, at that point they proceeded with a sale. Initially they were contemplating an open market sale but were able to find a private purchaser, or private offer, that resulted in the sale motion,” Riley said of Blue Rhino.
“At that point, we did receive interest from another party who might be interested in participating in a sale process but we didn’t really have enough time to have a sale hearing or to proceed forward ahead of the anticipated foreclosure date. Originally it was set for Oct. 18.”
The foreclosure was rescheduled for Oct. 25 but that still didn’t give the Baers enough time to have a bankruptcy judge decide whether it can sell. The Baers are evaluating their options but will likely drop the bankruptcy case and give in to the foreclosure process, Riley said.
Peter Murphy, an attorney for BRMK, agreed Wednesday that a foreclosure sale is imminent.
“My client is giving the debtor a little more time with relation to the foreclosure sale going forward to accommodate some significant bookings, so that some of the people who have booked The Pad for certain events are not left out in the cold,” he said.
“So, I anticipate the foreclosure sale to be completed in the next three weeks or so, to give the debtor enough time to handle those bookings,” Murphy told Judge Joseph Rosania.
One of the shared bunkrooms inside The Pad, a hotel and hostel in Silverthorne. (BusinessDen file)
After being accused of collusion, the owners of a bankrupt hotel and hostel in Silverthorne have abandoned plans to sell it to an investor for $10.1 million, half of its appraised value.
The Pad opened in November 2021 at 491 Rainbow Drive after 20 months of construction. It has 36 rooms and 101 beds, plus meeting rooms, decks with hot tubs and an independently owned bar. Its founders are the husband-and-wife duo Rob and Lynne Baer.
The Pad’s construction was funded by a $12.3 million loan from BRMK Lending out of Seattle and $2.8 million from Lever Capital in New York. When the Baers were unable to repay, The Pad was placed in receivership last September. It went bankrupt the next month.
On Aug. 15, Blue Rhino Investments agreed to pay $7.5 million for it and assume $2.6 million of the Lever loan. BRMK was to receive $6.6 million from the sale — half of the $13.3 million that The Pad says BRMK is owed and far less than the $18 million BRMK says it is owed.
BRMK and three other entities that are creditors of The Pad took issue with that sale.
“Blue Rhino is not a good faith purchaser but rather a party conspiring and in collusion with the debtor’s principals to the disadvantage of creditors,” a group of unsecured creditors wrote to a bankruptcy judge last month. “Debtor has devised a scheme with an insider for the benefit of debtor’s principals, the Baers, rather than exercise its sound business judgment.”
The creditors called it “a sham transaction” that would allow the Baers to stay on as managers of The Pad. They accused the Baers of ignoring a higher bid in early September to ensure that Blue Rhino and its owner, Stephen Caragol of Steamboat Springs, won out.
In their own objections to the sale, BRMK and Himmelman Construction — the latter has a $733,000 mechanic’s lien on The Pad — raised questions about the price, noting that the Baers had previously cited a 2022 appraisal that valued The Pad at $20.3 million.
“Even more alarming, The (Pad)’s owners stand to personally gain in connection with the sale, as Blue Rhino will employ the Baers as managers,” Himmelman noted. The Lakewood construction company didn’t like that it would have received no proceeds from the sale.
The Pad is a hybrid hotel and hostel at 491 Rainbow Dr. in Silverthorne. (Courtesy The Pad/David Lauer)
Keri Riley, a bankruptcy lawyer for The Pad, explained at a hearing Wednesday that the Baers and BRMK had an agreement this year whereby BRMK would not move forward with a foreclosure if the Baers could find financing or sell the property before mid-October.
“Unfortunately, the debtor’s refinancing efforts did fall through. So, at that point they proceeded with a sale. Initially they were contemplating an open market sale but were able to find a private purchaser, or private offer, that resulted in the sale motion,” Riley said of Blue Rhino.
“At that point, we did receive interest from another party who might be interested in participating in a sale process but we didn’t really have enough time to have a sale hearing or to proceed forward ahead of the anticipated foreclosure date. Originally it was set for Oct. 18.”
The foreclosure was rescheduled for Oct. 25 but that still didn’t give the Baers enough time to have a bankruptcy judge decide whether it can sell. The Baers are evaluating their options but will likely drop the bankruptcy case and give in to the foreclosure process, Riley said.
Peter Murphy, an attorney for BRMK, agreed Wednesday that a foreclosure sale is imminent.
“My client is giving the debtor a little more time with relation to the foreclosure sale going forward to accommodate some significant bookings, so that some of the people who have booked The Pad for certain events are not left out in the cold,” he said.
“So, I anticipate the foreclosure sale to be completed in the next three weeks or so, to give the debtor enough time to handle those bookings,” Murphy told Judge Joseph Rosania.
