Aviawest/Crelogix bankruptcy merged thread

[tpelton007 Junior Member Find all posts View Profile Close tpelton007]

why not three options? Why not open discussions?

Thanks for finding that 1.9 million detail - the developers have really messed up - and I think there should be some legal repercussions. Their personal assets should also be on the line if they were not acting appropriately as directors of ARC.

It would be nice if the board told us what they are doing to recover that - perhaps there was liability insurance in place.
Unfortunately the info coming from the remaining ARC board is almost zero and they certainly aren't sharing the whole truth.

The units are in generally good condition - so refurb is not a huge issue from my perspective.

$2-3 million in debt/costs/losses on $20-40 million assets is no where near bankrupt for the ARC. Liquidation seems like the best option. I don't know that they have to remain as timeshare units - couldn't they be sold off as vacation condos to folks who wanted to own such outright?

Forcing a single option on the membership also seems to be a poor choice on the part of the remaining board. Why can't they come out and give all of the details and give us three options (self-manage, liquidate, merge). Not supporting open communication between members is reprehensible (only a handful of ARC members will find their way here on their own).

Why is VI not willing to tell us whether or not we would have access to their prestige silver/gold/platinum level of ownership (if not, we would only be second class point holders). If we can what is the cost. Why not give a full disclosure of their dealings with P2P (how many of their members converted, what was the value of the assets they absorbed). Not coming clean is a really shady practice.

[djyamyam Senior Member Find all posts View Profile Close djyamyam]

1. Aviawest Resort Club has substantial assets (97 nice condos perhaps worth $400 000 each in todays market) and little or no debt. The club is not bankrupt, but the developer's companies are. Unfortunately it appears that the developers were also acting as the directors of the club (should have been a big red flag) and managed to prepay several hundred thousand $ and that is now lost.

Bottom line the existing annual ARC fees are more than sufficient - $2 500 000 a year budget would easily maintain the 97 condos in the pool.

The only sticky point is that the bankrupt companies are still running the resort (being monitored) and there has been some difficulty in figuring out who should be paying what to whom until that group of companies gets sorted out.


2. The remaining current directors (who were also directors when the developers were directors) seem to have made this deal with VI - which essentially forces everyone to choose whether to throw away their 'investment', or sign on for an extra chunk of MF with VI - who will then swallow ARC assets.

There are 4200 members, if 2000 choose to go with VI and the assets are worth $40 000 000 then that's $20 000 a piece being paid to VI to buy in (essentially a full price sale with no selling expenses), while the remaining 2200 members are forced to walk away with nothing. Why pay $20000 for a set of 100 VI points when you can find essentially free VI points contracts on the web (just pay closing costs).




3. The tactics being used to RAM THROUGH this merger are right out of a TS salesman's playbook.

- only give minimal information on costs (they aren't even telling us the VI maintenance fee rate - I had to dig that out on my own)

- don't spell out the other costs. Is there a cost to upgrade to the VI prestige level (one-time or on-going or both)? Seems like the only good way to ensure you get a good deal is to own VI points is to be a platinum member.

-don't provide any information that might cause the members to say "wait!"
They haven't even come clean with the members that the former directors managed to arrange to siphon off hundreds of thousands of dollars as prepayments - just before they went into bankruptcy protection. (Last May the majority of the directors were members of the developers' family - by October, their companies were in bankruptcy and no longer directors).

- Stonewall when people ask for information on the VI program. Both the ARC directors and VI (I called to ask about the prestige program - they said it would all be explained on the 11th)

- Block/fail to facilitate communication between members who want to discuss the options.

- and last but not least - put a false deadline on the process to force people into making a decision without thinking through all of the options - Why do we have to decide on March 11th - without knowing all of the potential costs without having other options presented (liquidate, special assessment to buy up resort support assets) and without having a fulsome discussion.

- Call everyone who can make it to one meeting in a room with a few well prepared sales pitches from the ARC directors and VI pitchmen all singing the same tune and nobody to offer a fully informed counter proposal

-Then force a vote (to which they have already determined the outcome because they collected proxies from many members who are assuming the directors are acting in their best interests - but who have not been told the whole story).

This whole merger deal smells very fishy. Is there someone in the back room somewhere making a deal? Are the former developers leveraging their way in by forcing this deal which might allow them to recover their ownership of some of their companies? Man I wish there were some government agency to call to investigate this whole mess.


4. It would also be great to get a fulsome disclosure about P2P merger with VI last year. What portion of the members of that group converted (10%? 30%? 50%?). What was the total value of the assets acquired by VI? I don't know many details, but for our ARC, it looks like VI is getting all of the benefit. More fee paying members (with very high fees) and more assets (at essentially no cost).

5. Fees are currently $7.08 per VI point (2011) which works out to almost ~$0.017 per RCI point (that is really high). Same period 2011-12 at ARC MF are ~$0.014 for the first 30000 and then ~$0.009 for the remainder. Remember - they are not telling the members this up front - I and anyone else who wanted to know ahead of the meeting had to dig it out on the Web.

Thus in 2011 fees for ARC members converting to VI (1 VI point for 420 RCI points) we see:

If you have 30000 RCI points, your maintenance cost will rise from $407 to $506 (a 24% increase)
If you have 60000 RCI points, your maintenance cost will rise from $676 to $1011
If you have 100000 RCI points, your maintenance cost will rise from $1034 to $1685
If you have 150000 RCI points, your maintenance cost will rise from $1487 to $2537 (a 71% increase!)

I also note that VIs maintenance fees have gone up 35 % over the last 10 years, and almost 60% from 99/00-2009/10.


Greg, could you be the one to shed some light on this?

I am especially interested in finding out what we might expect on the other side of the meeting. They won't tell us what the hidden costs are. As a VI member, do you have any idea what the costs for the prestige silver, gold and platinum plans are. Are they included at no cost, is there a one time fee? is there an annual fee?

I understand that there may be variations, but what is typical? What might be the cost of the Prestige membership (for 100 VI points, for 400 VI points)?


Thanks!

As a board member at Whistler Vacation Club when PTP went under and VI was recommended to us to take over the mgmt I can share some insight into this repeat scenario.

It's easy for all the sideliners to say "this is what we should do" but that fact is that you need a number of owners to actually go and DO the actual work that needs to be done. If your independent board members aren't strong and not willing to take on short-term FULL-TIME job of pulling the Club out of the crapper, then forget about any alternatives to VI, including liquidation.

I'm assuming that the ARC assets (ie. the 97 condos) are held in a trust. Who ACTUALLY controls the trust? Yes there are a lot of assets but the issue is cashflow and the Club has none based on what I hear. You will need quite a bit in a very short period of time in order to maintain the operations of the Club. Where is that money going to come from? Banks will not lend money to a non-profit organization consisting of thousands of individual owners assuming that your Club's bylaws allow borrowing. Even if you were to have a special assessment, that takes time to identify how much is needed and actually collect the money. You don't have the time

Who's going to run the Club? Your management company is toast. You have 3 weeks to find a management that is able to do due dilligence and step in to clean up this mess. Your independent board has to be looking for an alternative management company yesterday if you don't choose VI. When VI was brought in, they were willing to front up money for the short term (with interest).

It's easy to say liquidate but you can't flood the market and when you're talking that many units, you either need to sell en masse so your buyers are very limited. Those that are buying en masse, are used to buying at firesale prices and you won't get anywhere near the FMV. Expect to get 20 - 30 cents on the dollar. If you want to sell it piecemiel, then you need to have someone manage the property in the interim and you're looking at a couple year process at the very minimum. Where's the cash going to come from for that?

Assuming that everyone gets to vote, what about all the units that are held by Aviawest/developer? Do they get to vote? Have they been taken over by Crelogics (the lender)? Do they get to vote? What percentage is that compared to the rest of the individual owners? Where do they come into play?

PTP owners voted to accept the VI proposal but we did not. I can't tell you if former PTP owners are happy or not because I'm not one of them. However, saying that you want an alternative to VI and actually doing something about it are two very different things. Based on my experience, the majority of TS owners are apathetic towards taking an active involvement in the TS that they own, especially when it means a tonne of work when the crap hits the fan like it has in your case.

I'm not endorsing VI. However, what I am saying is that you really don't have a lot of options and the options of liquidation are significantly more involved than just looking at the perceived value of the buildings.

[djyamyam Senior Member Find all posts View Profile Close djyamyam]

One more thing that I should add about VI and your expectations of information. I don't blame VI for being opportunistic about getting involved. However, they are not doing this as a white knight. It's a business decision for them that they expect to be able to win in the long run.

Think about it in business terms. This is NOT an merger of equals. This is a one company tossing out a lifeline and you can take it under their terms or you can go under. It's no skin off their nose if you decide not to take it because they'll just wait for the next opportunity to pop up again because it will. So you're expectation to "see" what they have before you decide to take the lifeline isn't realistic. You aren't negotiating from a position of strength.

[deejay43 Junior Member Find all posts View Profile Close deejay43]

Since receiving the notice of the meeting at UVic re Vacations Internationale I have spent considerable time on the internet in search of information. As a purchaser of Aviawest Vacation Club points in August 2011, I intended to use this space to vent my anger at the Developers and Board of Directors for their complicity in the continued sale of vacation programs despite the fact that they had to have known about their impending fall from grace. Rather than giving a perspective that could be considered prejudicial I suggest doing a search for Grant Thornton LLD in Canada Aviawest. On that site you will find all the sworn affidavits by the major players in the Companies' Creditors Arrangement Act.

The information found therein includes admission to imminent disconnection of services by Fortis Gas, BC Hydro, Shaw Business and others as far back as mid-2011, that some properties under the umbrella of the Aviawest Group were saddled with 3rd and even 4th mortgages on some of which interest has not been paid since 2009. Some of those documents are rife with terms such as "hopelessly insolvent" in describing the status of Aviawest prior to their seeking creditor protection October 19, 2011.

In the List of Known Creditors I could not find my name despite the fact that I had paid for my points in full but have no deed to the real estate held in trust for the members of the Aviawest Vacation Club which, according to a letter from CEO Jim Pearson in December, was not included in the CCAA action and that club members were not at risk of losing their investment. If additional monies must be paid to a third party in order to maintain ownership of the points, then all of us do have that risk.

I would be interested to find out what relationship with Aviawest are the parties shown under the list of Unsecured Creditors. Are the people named on that list some of the 4500 who are to vote on the proposal? Does anyone have any idea how club members can be contacted by an outside party with respect to this vote? What other avenues did Aviawest pursue in the search that resulted in the choice of Vacations International Inc.?

[tpelton007 Junior Member Find all posts View Profile Close tpelton007]

Thanks for some clear advice...

Thanks djyamyam,

This is the first sensible thing I have heard in favor of allowing VI to take over. I appreciate your response. It would have been much better if the board had come up with some of this information, instead of going down the road of telling us nothing (except for positive merger details).

The current board ought to have come clean and supported full communication - rather than what they have done.

The members of ARC ought to be suing the former directors (the developers) for breach of duty as directors of ARC - they had to have known of the problems, and ought to have made decisions to protect our assets - instead they caused ARC to advance funds to their companies (imprudent at the very least).

We still need information on whether and how we might be able to acquire membership in VI's prestige program - at the platinum level - and at what cost. This information should be freely available up front. Prestige platinum seems like the only way to get something close to fair value in VI.

Tim

[outforever! Junior Member Find all posts View Profile Close outforever!]

We got out!

We currently have 30 000 annual RCI points through Aviawest. I am aware they have filed for bankruptcy but we are just looking to get out. I am desperate.
Any help?????

Should we hang on and hopefully they become bankrupt and we no longer have to pay them, do we try sell, do we get out at a loss. Any help!!!!

We owned 40,000 points with Aviawest and were also desperate to get out! After many emails and phone calls with Aviawest Resort Club directors we were able to get out of our contract by paying the 2012 maintenance fee of $556.00 in full and the legal tranfer fee of $140.00 to transfer our $40,000 points back to Aviawest. We lost over $17,000 in this expensive mistake but sometimes the act of walking away is the best move and brings your the peace of mind and closure needed to realize that you made a really bad decision, live and learn! I pity any time share sales representative that EVER approaches me or my husband in the future! The sting of losing close to $20,000 will NEVER be forgotten!!!!!! I would suggest this approach, it worked for us! Best of luck !

[djyamyam Senior Member Find all posts View Profile Close djyamyam]

We still need information on whether and how we might be able to acquire membership in VI's prestige program - at the platinum level - and at what cost. This information should be freely available up front. Prestige platinum seems like the only way to get something close to fair value in VI.

Tim

I'm not sure why you're so bent on getting platinum level with VI. As with most active points programs (Wyndham, Bluegreen, HGVC, etc), you're paying a premium to get questionable additional value. You've already identified that VI points can be purchased on the resale market for peanuts. Why pay retail to get platinum? Unless you are thinking of buying a bunch of resale points and then doing a retail purchase to combine all the resale points with the retail to achieve platinum. That would be something to consider if you think it worthwhile.

I don't own VI but some other members here do. Have you reviewed the VI synopsis OY? Here is the link.
Vacation Internationale Vacation Timeshare Program VTS - Timeshare Users Group free Timeshare Advice article

[suzie Junior Member Find all posts View Profile Close suzie]

TPELTON007 i hope you are going to the meeting on march 11 because we need a strong voice for us. Most of us do not understand what is happening and like a flock of ducks we paddle along in a row. In my heart I know something is wrong here. What if we go to the media? Could this be a way of getting help for me members. I have spoken to the superintendant of Real Estate, but they say they only work with new sales. The Real Estate council only works with real estate persons. So, I ask how many people signed up last year and had no disclosure given to them or put into writing about Aviawest financial cricis?
How many members can we contact prior to the meeting in order to get a no vote or at least hold off the vote until we all understand what is going on?

[therogersfam Junior Member Find all posts View Profile Close therogersfam]

I think this pretty much nails it. Is it right that a huge amount was transferred ahead to the developer in order for the maintenance contract - no. Did the directors act in bad faith not sure. Am I willing to lead the charge to go through all the legal hoops involved in having that detremined, no. Is anyone?

So what next. Voting no alone doesn't do it. is anyone prepared to vote no, read the constitution to determine what it would take to force a new board election, run for the board witha group of individuals with the skills time and experience to operate until such time as everything can be dealt with. Then hire accountants, lawyers and real estate experts to 1) deal with the past decisions of the board to deal with recovery of the lost money. (in personal bankruptcy -don't know if the same applies here- certain debts can survive a bankruptcy even if unsecured but a legal ruling would be required stronger than just acting in bad faith - don't want the use the word for the court finding but it can be found in section 178(1)(e) of the BIA) personally don't think its worth it and bad faith is still a long way from 1781e.

What else - could VI be more forthcoming. Sure I wish they would but it is what it is. At least there is a possibility on the table.

In the absence of someone stepping forward with a credible plan to take control I will probably vote yes and make my decision to stay and pay more or walk away when the time comes.

If there is anyone in VI that would be willing to discuss some of the specifics of how the club works (e internal and external exchanges) please send me a private message.

As a board member at Whistler Vacation Club when PTP went under and VI was recommended to us to take over the mgmt I can share some insight into this repeat scenario.

It's easy for all the sideliners to say "this is what we should do" but that fact is that you need a number of owners to actually go and DO the actual work that needs to be done. If your independent board members aren't strong and not willing to take on short-term FULL-TIME job of pulling the Club out of the crapper, then forget about any alternatives to VI, including liquidation.

I'm assuming that the ARC assets (ie. the 97 condos) are held in a trust. Who ACTUALLY controls the trust? Yes there are a lot of assets but the issue is cashflow and the Club has none based on what I hear. You will need quite a bit in a very short period of time in order to maintain the operations of the Club. Where is that money going to come from? Banks will not lend money to a non-profit organization consisting of thousands of individual owners assuming that your Club's bylaws allow borrowing. Even if you were to have a special assessment, that takes time to identify how much is needed and actually collect the money. You don't have the time

Who's going to run the Club? Your management company is toast. You have 3 weeks to find a management that is able to do due dilligence and step in to clean up this mess. Your independent board has to be looking for an alternative management company yesterday if you don't choose VI. When VI was brought in, they were willing to front up money for the short term (with interest).

It's easy to say liquidate but you can't flood the market and when you're talking that many units, you either need to sell en masse so your buyers are very limited. Those that are buying en masse, are used to buying at firesale prices and you won't get anywhere near the FMV. Expect to get 20 - 30 cents on the dollar. If you want to sell it piecemiel, then you need to have someone manage the property in the interim and you're looking at a couple year process at the very minimum. Where's the cash going to come from for that?

Assuming that everyone gets to vote, what about all the units that are held by Aviawest/developer? Do they get to vote? Have they been taken over by Crelogics (the lender)? Do they get to vote? What percentage is that compared to the rest of the individual owners? Where do they come into play?

PTP owners voted to accept the VI proposal but we did not. I can't tell you if former PTP owners are happy or not because I'm not one of them. However, saying that you want an alternative to VI and actually doing something about it are two very different things. Based on my experience, the majority of TS owners are apathetic towards taking an active involvement in the TS that they own, especially when it means a tonne of work when the crap hits the fan like it has in your case.

I'm not endorsing VI. However, what I am saying is that you really don't have a lot of options and the options of liquidation are significantly more involved than just looking at the perceived value of the buildings.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

As a board member at Whistler Vacation Club when PTP went under and VI was recommended to us to take over the mgmt I can share some insight into this repeat scenario.
…[snip]

Quality Post!!!!!

[therogersfam Junior Member Find all posts View Profile Close therogersfam]

Deejay43:

That list of unsecured creditors I beleive you are referring to are people who loaned money to the developer without security, while many or all may be ARC members (and therefore able to vote) it is a separate matter from any purchases of ARC points or property. It is also not relevant to the matter of VI, whatever happens with that will not change either their status under the CCAA or their probability of receviving any money under the CCAA.

Since receiving the notice of the meeting at UVic re Vacations Internationale I have spent considerable time on the internet in search of information. As a purchaser of Aviawest Vacation Club points in August 2011, I intended to use this space to vent my anger at the Developers and Board of Directors for their complicity in the continued sale of vacation programs despite the fact that they had to have known about their impending fall from grace. Rather than giving a perspective that could be considered prejudicial I suggest doing a search for Grant Thornton LLD in Canada Aviawest. On that site you will find all the sworn affidavits by the major players in the Companies' Creditors Arrangement Act.

The information found therein includes admission to imminent disconnection of services by Fortis Gas, BC Hydro, Shaw Business and others as far back as mid-2011, that some properties under the umbrella of the Aviawest Group were saddled with 3rd and even 4th mortgages on some of which interest has not been paid since 2009. Some of those documents are rife with terms such as "hopelessly insolvent" in describing the status of Aviawest prior to their seeking creditor protection October 19, 2011.

In the List of Known Creditors I could not find my name despite the fact that I had paid for my points in full but have no deed to the real estate held in trust for the members of the Aviawest Vacation Club which, according to a letter from CEO Jim Pearson in December, was not included in the CCAA action and that club members were not at risk of losing their investment. If additional monies must be paid to a third party in order to maintain ownership of the points, then all of us do have that risk.

I would be interested to find out what relationship with Aviawest are the parties shown under the list of Unsecured Creditors. Are the people named on that list some of the 4500 who are to vote on the proposal? Does anyone have any idea how club members can be contacted by an outside party with respect to this vote? What other avenues did Aviawest pursue in the search that resulted in the choice of Vacations International Inc.?

[Lesson Learned Junior Member Find all posts View Profile Close Lesson Learned]

Voting?

I am trying to figure out how to vote.

Can someone please help me understand what happens if

1) The vote is yes
2) The vote is no


From what I have read the best option to get of out of this is to vote yes and then choose NOT to join VI. Is this the best option of getting out of this?

Thanks

[spirit Junior Member Find all posts View Profile Close spirit]

I wish you all good luck

I have stayed at Pacific Shores and Victoria Parkside and found them to be wonderful places to stay. This year I almost bought a beautiful summer week from an owner but was outbid at the last moment.
I think that Aviawest is a quality package and there are many owners who are competent, intelligent people. No I am not a shill, just a lowly teacher living on the prairies with dreams of vacationing near the ocean.
I am following this topic very closely because despite everything I think ownership of Aviawest still has value. NOT the fractional packages since building those units got the developers into a lot of trouble.
From what I have read joining VI would not be a bad thing since their mandate is to charge maintenence fees that will keep up the resort. It is owner maintained so the BEST interests of the owners is paramount.
It seems that the timeshare owners have been carrying the debt occurred by the developers and this is an unrealistic expectation and perhaps illegal.
Sorry if this post is rambling but the process itself is murky and before the courts. It seems to me that if you are an original owner you have owned for 30 or so years and perhaps would like to rid yourself of future obligations. If you bought recently you have had little time to enjoy your "investment" and would not want to throw good money after bad. All in all a sad situation. I wish all of you luck in resolving this situation.

[Roz Junior Member Find all posts View Profile Close Roz]

I am wondering if everyone is still continuing to pay their maintenance fee to ARC? Should I be stopping the monthly payment until the matter settles? If I do stop as of March 1, do you think that would forfeit my right to vote on March 11?

I am struggling with whether to convert to VI if the merger is approved. With 2 elementary school age kids, we will be travelling during high season for the next 10+ years and RCI availability in Maui in December (week 51 & 52) is virtually non-existent in the last couple of years. If Hawaii is our main destination, are we better off giving up our points and pay for accommodation, instead of paying the maintenance fee? I checked out the list of VI resorts in Maui and we really are only interested in Papakea.

Thanks.

[Bdlogan Junior Member Find all posts View Profile Close Bdlogan]

Aviawest Resort Club Anyone want to research options and put alternate plan together

I believe that Aviawest Resort Club is a non profit organization made up of timeshare owners. We have been told as lender listed as " unsecured" with Aviawest Group that the points which notes were secured with have not been transferred over to the club but are held separately. We have not been told yet if those points are going to be another part of this deal yet.
A great place to get a clear picture of the relationships between the companies is on page 33 of 46 of Grant Thornton's Oct 31st Interim Monitors Report to the court. This is the link to the documents. The information can be found under the heading "INTERIM MONITOR'S REPORTS"
Grant Thornton LLP in Canada | Aviawest Group
I really am loving our timeshare which we have had for 17 years. We have travelled to many places with many international exchanges. Recently we completed a holiday with 7 weeks of it done through exchange in the Caribbean and Venezuela. We do not want to see this stop. Part of the exchange benefit is that it has always been much cheaper than any other method I know.
It would seem that:
-VI offers a choice for maintaining exchange through them and RCI. At what annual cost??
-currently we as a group can always get another manager and we appear to have the right to say about that through our board?
- since a merger is being proposed it appears we will dissolve and lose our rights?our owners will be in another country with membership which will make us insignificant in all future possible voting rights.
-VI does offer an attractive group of in house us, canada Mexico exchange locations without going through RCI.
my questions are
What managers have been considered as an option? Can we form our own management group and offer positions to existing employees in the event of the collapse of our current management company. Is there a group or company currently looking at purchasing assets and renting units held and handled by ARI.
My preference is that we not merge and find another manager. Are there any members that have time or expertise that would like to help me work on this idea starting immediately. Please reply.