June 25, 2004

Next step in Sunset proceeding uncertain
By Lora Abcarian

DENVER -- Attorney Leo M. Weiss, who represents U.S.Trustee Charles McVay, said it is unknown when the U.S. Bankruptcy Court for the District of Colorado will hear motions to dismiss proceedings for Villages at Sunset developer Larry Kanne.

A number of motions were filed with the Bankruptcy Court objecting to Kanne's request for permission to sell the planned unit development to Security Land Trust/trustee Robert Warner. The company developed the Wal-Mart/Home Depot center in Bergen Park.

"Everything depends upon the sale," commented Weiss. By this he referred to Kanne and Warner's ability to consummate the deal.

Five separate objections to the bankruptcy proceeding were filed with the court in June.

Attorney James Huemoeller, who represents Park County, urged the court to deny the sale. Huemoeller wrote Kanne did not file a $2 million irrevocable letter of credit on Dec. 5, 2003. On that same date, Kanne filed for Chapter 11 bankruptcy.

Because the letter of credit was not posted, Huemoeller indicated the Subdivision Improvement Agreement previously approved by the Board of County Commissioners, was no longer valid and is therefore terminated. Park County is also taking the position the SIA is not an assumable contract.

Weiss wrote Kanne filed for Chapter 11 bankruptcy to preserve his rights on the land upon which the development would be built. Weiss stated Kanne previously sought amendments to his SIA which were not approved by the BOCC.

He also stated the land user regulation governing the development is not an executory contract and more closely resembles a license or permit to which the Bankruptcy Court's automatic stay are inapplicable.

Weiss urged the court to conduct a hearing on the sale and compel Warner to show the sale can be consummated in a reasonable period of time.

United Mountain Communities President Lynn Louvar sent the organization's objection to Weiss. According to Louvar's correspondence, Kanne attended a number of public meetings during which he stated he had buyers for the Sunset PUD. She also wrote Kanne had not honored the terms of an agreement with the Will-O-Wisp Metropolitan District to upgrade the district's water treatment facility.

Estimated cost for improvements is $14 million.

Louvar indicated Kanne had agreed to repaving of roads within the Will-O-Wisp subdivision. UMC urged the court to dismiss the Chapter 11 proceeding.

Deer Creek Valley Ranchos Homeowners Association President Bruce Holte supported Park County's position in the proceeding, saying dismissal was in the best interest of Park County residents.

Attorney Michael Schaefer filed an objection to the sale in behalf of Bailey resident/creditor Jean Wagner. Schaefer also noted Kanne's statements concerning potential project purchasers, failure to comply with the terms of the SIA and legalities surrounding assumption of the SIA by a potential buyer.

Schaefer indicated Kanne did not comply with a directive to produce a reorganization plan to the Bankruptcy Court, instead raising the issue of a possible buyer.

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