Harbor Hill bankruptcy schedules and updates

[Warren Agin]

Dear Harbor Hill Interval Owners:

First, Harbor Hill at Provincetown Condominium Trust has filed its schedules and statement of financial affairs with the court. I've added this file to the public Google Drive, and you can access the schedules at

https://drive.google.com/open?id=0B0d0aRPobaiHaXB4azZIZUZyZ2c

Please note that while many interval owners may be creditors, these potential claims are not yet reflected in the bankruptcy schedules.

Second, please look at the prior e-mails on the Google Groups page for notices sent before you signed up. We have about 200 owners on this list now.

Third, I remain in the process of collecting and organizing the business records. Management has cooperated with me fully during this process. I've also engaged a law firm specializing in condominium law to assist me, and will be filing an employment motion with the Court shortly. 

Fourth, it appears building three is owned by the Harbor Hill Condominium Trust, a separate entity that is not in bankruptcy. Management for Harbor Hill at Provincetown Condominium Trust, which was running building three in conjunction with the other buildings, had closed this building as well. I've segregated the keys and paper ownership files for building three, and will turn them over on request to its board of trustees, once reconstituted.

Fifth, I've had an opportunity to examine the possible solutions for resolving HHAPCT's financial problems, including a talk with RCI and some other professionals who have dealt with similar problems. I outline them in the rest of this e-mail.

HHAPCT owes about $600,000 to the IRS and the Town of Provincetown. Both creditors have the ability to seize the underlying real estate - thus effectively terminating the timeshare - and the IRS can, and was about to, seize deposit funds. Management prior to 2015 had failed to properly track and record timeshare sales and transfers, a problem that needed to be fixed and really requires employment of professionals. I understand that you, as interval owners, did not cause this problem, and that there is a fundamental unfairness to requiring you to pay additional funds to solve it, but in cases like this other solutions are not practicable. 

There are three ways to resolve the issue:

1. Interval owners pay additional assessments sufficient to cover the cost of paying the debt and the costs (not insignificant) of correcting the records. The problem is that typically in cases like this only a small percentage of owners pay, which means the association must assess even larger fees against those who do pay - and then take legal action against the others. I understand that only half of interval owners paid the 2015 assessment. In some cases, the cost of such legal action exceeds the value of the timeshare intervals involved, which means even more assessments. I will explore this option, and if pursued adjustments would need to be made for owners who paid for 2016, but were unable to use their week due to the bankruptcy.

I will explore this as a possible solution, and will in the next week or two circulate a poll designed to determine whether this solution is workable. Please watch for it and participate.

2. The estate recovers as many interval units as possible for the association, and sells those interval units to a single buyer who takes control of the facility as a whole, and then resells the recovered units. This option might include a small additional assessment, and owners would be expected to bring their payments current. Again, adjustments would need to be made for owners who paid for 2016, but were unable to use their week due to the bankruptcy. Once debts and the costs of the bankruptcy process and sale are paid, excess funds would distribute to unit owners in good standing. This option allows owners who are current and want to keep their units to keep them, but might not maximize the value for all unit owners. It also is possible that no buyer can be obtained at a sufficient price.

3. The estate terminates the timeshare, asking owners to surrender their intervals, and sells the land and the four buildings through an auction process designed to maximize a recovery. Excess funds would be distributed to cooperating unit owners and those in good standing, after adjustments for outstanding fees and for those situations where owners paid for 2016, but were unable to use their week due to the bankruptcy. Possibly, the distribution of excess proceeds might be based on the type of week held - for example red week owners would receive more than blue week owners. By themselves, the four buildings have an estimated market value of about $10,000,000, perhaps more, based on the information currently available to me. Based on this, payments to interval owners from a liquidation seem very likely.

The poll will also help me determine how this option might progress.

In all three cases, we will explore additional options for recovery of funds from other sources as well. But, it is impractical to expect other avenues of recovery to generate funds within a useful time period.

Over the next couple of weeks I will be talking to a number of auction companies about the situation, as well as preparing the referenced poll. I will continue to review all e-mails sent to harborhi...@gmail.com, consider your comments, and try to address questions through these communications.

Regards,

Warren E. Agin, Chapter 7 Trustee