• Legal Update

From: Stephen J. Lord, TMA Counsel

Re: Foreclosure

Dated: September 27, 2013

As of today, Sheriff’s sales have occurred on the following lien claims:

1. Scott Hedrick – one Trillium townhome

2. Oz Architects/Tamarack Designs – 15 Trillium townhomes

3. Banner/Sabey – Village Plaza

4. BAG Holdings – Fairmont residences in the Whitewater neighborhood and the Fairmont Hotel and related sites immediately east of Village Plaza and north of Lake Wing.

Remaining Sheriff’s sales are:

1. MHTN Architects – Lake Wing

2. Credit Suisse – the balance of the Resort not previously sold to private owners or the lien claimants listed above.

Last week, Credit Suisse requested that the Valley County Court Clerk issue another writ of execution. This is normally the first step in a creditor’s process resulting in a request for the Sheriff to issue a Notice of Sheriff’s sale. If the Sheriff publishes a Notice of Sheriff’s sale, then we anticipate that, at the earliest, Credit Suisse could schedule a Sheriff’s sale for the Credit Suisse collateral before the end of October. The Star News reported on Thursday that the Sheriff’s Sale has been scheduled for the Credit Suisse collateral on October 24^th.

At present, we anticipate that Credit Suisse will submit a credit bid, although in what dollar amount we don’t know, and there remain other possibilities, including the possibility of the sale of the Credit Suisse note and mortgage to a third party prior to the time scheduled for a Sheriff’s sale, or an assignment immediately following the Sheriff’s sale.

As noted, this is a complex piece of collateral for the $250,000,000 Credit Suisse mortgages. Because of its complexity, seemingly small issues could potentially disrupt or postpone a sale past the end of October.

In the meantime, TMA is confident that all of the major payments needed to operate for this coming winter (a substantial insurance premium and payment of the State Leasehold annual rent) will be paid on or before their due dates.

When Credit Suisse (or a potential third party) acquires the property as a consequence of a Sheriff’s sale, TMA anticipates that this will mark a substantial, positive, advance for all current homeowners. Among other things, new members at TMA (including Scott Hedrick, Oz Architects/Tamarack Designs, Banner/Sabey, and BAG Holdings) have been invoiced for association assessments for portions of Q3/2013. The TMA Board of Directors will monitorexpenses and revenues carefully and may make appropriate adjustments after a reasonable time to determine the viability of assessments being paid by these new members on an ongoing basis.

Rights of redemption still exist in both Tamarack Resort, LLC and in other secured creditors whose interests will be foreclosed by the Sheriff’s sales.  Idaho law states that the expense that a creditor might incur making improvements during the redemption period cannot be recouped from another creditor’s redemption or the debtor’s redemption.

If Banner Sabey, for example, spent another $5 million to improve the Village Plaza in the next 6 months, a junior creditor could still “redeem” by paying the sheriff only the approximately $12 million amount that Banner Sabey credit bid at the sheriff’s sale on September 5, plus taxes paid and interest, and the extra $5 million in improvements would be lost.  As a consequence, TMA does not anticipate significant improvements will start to be made to the smaller parcels until 6 months after their dates of Sheriff’s sale.

For the rest of the Resort, it would be unlikely that Credit Suisse or another buyer would begin making improvements for a year, because the period for redemption on the larger Credit Suisse-mortgaged real property is 1 year.

Nonetheless, we have been engaged in substantial, cooperative and constructive discussions with Credit Suisse about the need to continue ski and golf operations and amenity maintenance, with particular reference to ski facilities and common areas at the Lodge at Osprey Meadows.

The West Mountain Golf assets (Golf course, Pro Shop, outdoor dining terrace, the pool and hot tub, Morel’s, the Lobby Bar, most of the first floor and lowest level of the Lodge) are not included in the foreclosure case initiated by Credit Suisse, but are the subject of a separate foreclosure initiated by the RSPT pension funds.  TMA hopes to provide another legal update within the next few weeks with further details regarding the ongoing West Mountain Golf foreclosure.

This update should not be considered legal advice to any particular member.  Instead, it is a summary of many different aspects of litigation and business strategy.  Much of it is speculative, based on likely or potential outcomes in light of known principles of law.  The Tamarack litigation is extraordinarily complex and involves at least three current lawsuits in both state and federal courts.  If you seek more detailed understanding, or any understanding needed for acquisition, please contact a lawyer experienced in troubled asset workouts.