Five Mile seeks limited stay of MSR Resort plan confirmation ruling

By Caroline Salls

Pittsburgh, Feb. 27 - Five Mile Capital Partners LLC is asking the U.S. District Court for the Southern District of New York to grant a limited stay of MSR Resort Golf Course LLC's plan of reorganization confirmation order, pending the outcome of Five Mile's appeal, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Specifically, Five Mile said it is either seeking a stay of the distribution of $58 million of cash or property out of a $1.5 billion plan transaction or equivalent adequate relief.

Five Mile said the plan distributes asset sale proceeds "to pay every single direct creditor of the debtors at least the full principle amount of its claims, except for Five Mile, which is to receive nothing whatsoever."

"That a $1.5 billion sale and plan transaction can somehow yield exactly enough consideration to pay all other claims in full, but not a penny more for the one remaining creditor, in and of itself should suggest that appellate review is warranted," Five Mile said in the motion.

In addition, Five Mile said the bankruptcy court made errors of law in its plan confirmation decision, including errors related to disallowance of indemnification claims, violation of multiple confirmation requirements and determining that the asset purchaser was a good faith purchaser.

"These are not technical or harmless errors," Five Mile said in the stay motion.

"They represent significant departures from numerous procedural and substantive requirements for confirmation of a plan, and, as a result, Five Mile has received no recovery on its loans."

MSR Resort owns and operates five resorts. The New York-based company filed for bankruptcy on Feb. 1, 2011. The Chapter 11 case number is 11-10372.

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