Bond Pass Lawsuit Update

[SkiDork]

BTW - ASC is named in the suit.

[Bubba]

If this is an asset sale, why are the same employees there? If this is an asset sale, and Sherburne Corp died in May 2007 at age 48.5, what is it exactly they are celebrating the 50th aniversary of this year? Why is it still called Killington? Why is the logo the same? Why have they issued press releases with language that uses phrases like "over the last 3 years we have..."

I don't see where KSRP gets to have it both ways, an asset sale when it suits them to refute the claims of certain creditors, and a 50 year history of the same entity with the same people with the same name to suit their operations and public image.

Not to sound like a prick, but really? Is that the extent of your argument? It is an asset sale in every sense of the term. The Asset Purchase Agreement specifically spells out the obligations and assets that KSRP assumed or purchased. Asset sales are a very common means of affecting an M&A transaction. In some cases, acquirors simply want selected assets or a business division from a competitor. In other cases, they want the whole business, but either the tax consequences are too painful (C corp vs. S corp makes a big difference) or there are liabilities (environmental or otherwise) that the buyer doesn't wish to assume. For the Killington deal, I suspect it had to be an asset deal regardless, since KSRP could not/would not buy all of the assets of SKI Ltd. which, until Feb 17, 2007, included Mt. Snow (among other things). If the Court finds KSRP liable here, it better be careful, b/c as Bubba points out, it would threaten to invalidate the entire notion that you can leave behind unwanted liabilites in an asset deal. That would be like saying that you can't just buy a guy's winter tires that he doesn't want, you have to buy the whole car.

With respect to the continued usage of the name, I really don't understand your point. JP Morgan Chase is primarily a product of two big mergers - the purchase of Chase Manhattan by Chemical Bank and the purchase of JP Morgan by Chase Manhattan. The Morgan and Chase names live on even though they were the acquired entities both times. This is absolutely standard practice in all forms of acquisitions. You really think that GE makes the toaster ovens and alarm clocks with its name on it? The Killington name and the Killington employees were simply some of the assets they acquired. I'm sure that some of this post comes off as condescending and/or insulting. But the reality is that you are howling in the night about things you clearly don't understand out of some sort of misplaced sense of injustice. KSRP has no liability here, and KSAA should stop dragging their already lousy name through the mud. KSRP has already shown they are quite capable in generating their own bad PR. If there is anyone to blame here (and I'm not saying there is), it would be ASC, and I suspect that is a large reason for the existence of the escrow account.

There are various tests to determine what is or isn't an asset sale. The continuing employees, continuing name, etc. all enter into the tests. That will be part of the determination as to whether or not this was truly an asset sale. My point in raising the environmental liability issue is that new ownership may have more at stake here than the passes if they lose, thus they might want to consider a settlement. Of course, based on what we know so far of Cumming and Company in Utah, the word "compromise" does not appear in their vocabulary.

[Tin Woodsman]

BTW - ASC is named in the suit.

I know, and they should be. I don't understand why KSAA is trying to smear KSRP in the process.

[skiadikt]

the other thing to remember is that many of the folks who own those passes are old timers who happen to be active in the town and on the town board. spoke to some local folks this weekend who next season are facing buying passes for the first time in over 35 years. their feeling is that powdr is messing with the very group who control the future of the village. never mind all the other crap, right now it's a hell no ...

[Tin Woodsman]

There are various tests to determine what is or isn't an asset sale. The continuing employees, continuing name, etc. all enter into the tests. That will be part of the determination as to whether or not this was truly an asset sale.

How could it not be an asset sale? When it was purchased by Otten, S-K-I Ltd. included Killington, Mt. Snow, Haystack, Waterville Valley and a controlling interest in Sugarloaf. Haystack and WV had already been sold off years ago. The sale of Mt. Snow to Peaks was announced on Feb 17, 2007, just four days prior to the K sale announcement, and didn't close until several months later. The sale of Sugarloaf wasn't even announced until June of 2007. Accordingly, unless KSRP wanted to buy Sugarloaf and arguably Mt. Snow as well, its only choice was an asset deal. It could not have pursued a stock deal with ASC that would have retained the lifetime pass obligation. The use of continuing employees and the brand name are such small factors as to be nearly irrelevant, b/c that happens with a significant % of asset deals involving a going concern.

My point in raising the environmental liability issue is that new ownership may have more at stake here than the passes if they lose, thus they might want to consider a settlement. Of course, based on what we know so far of Cumming and Company in Utah, the word "compromise" does not appear in their vocabulary.

It won't just be new ownership that has something at stake here. If the Court were to rule that KSRP has no ability to leave the environmental issues behind, then that would threaten to invalidate similar constructs in other asset deals. I assure you that such a decision would not proceed blithely unopposed. It's a construct that is fundamental to M&A work and which appears in the preponderance of asset deals.

Based on the facts that I've seen, I would counsel Cumming to continue fighting this but to get his side of the story out a little more clearly. All of the stories I've read in the press seem to leave unchallenged the notion that b/c ASC honored the passes then there is some sort of implicit obligation for KSRP to do so. If there is a bad guy here, it's ASC, not Cumming (for a change).

[Stormchaser]

At what point does honoring the passes become a "cost of business" decision rather than an obligation...? I personally dont think KSAA has a leg to stand on, but the cost of fighting it, may be more than just giving these folks passes to shut them up.

[s1am]

I don't understand why KSAA is trying to smear KSRP in the process.

KSAA are not trying to smear any person, business or organization. KSRP seem to need no help getting their feet into their mouths. For most of us the decision to purchase a lifetime pass represented a very significant commitment to skiing at Killington. As such we want to see Killington continue to be successful. Our goal is to continue to have our lifetime passes honored. We would prefer to have avoided legal action in order to do so. Nonetheless based on the analysis of our group and our legal team, we feel that we have solid grounds for continuing to have our lifetime ski passes honored at Killington.

[Tin Woodsman]

At what point does honoring the passes become a "cost of business" decision rather than an obligation...? I personally dont think KSAA has a leg to stand on, but the cost of fighting it, may be more than just giving these folks passes to shut them up.

I suspect that''s a big part of KSAA's motivation with respect to KSRP - essentially, blackmail.

[Stormchaser]

At what point does honoring the passes become a "cost of business" decision rather than an obligation...? I personally dont think KSAA has a leg to stand on, but the cost of fighting it, may be more than just giving these folks passes to shut them up.

I suspect that''s a big part of KSAA's motivation with respect to KSRP - essentially, blackmail.

Or shrewd business sense... I hate ticket scalpers too, but it doesnt seem to stop them.

[Tin Woodsman]

I don't understand why KSAA is trying to smear KSRP in the process.

KSAA are not trying to smear any person, business or organization. KSRP seem to need no help getting their feet into their mouths.

Whether you're trying or not, you are certainly doing it. Your quotes in the local press seem to all be directed towards KSRP rather than ASC. As mentioned above, they don't need your help in to make themselves look like idiots, but that's ultimately besides the point.

For most of us the decision to purchase a lifetime pass represented a very significant commitment to skiing at Killington. As such we want to see Killington continue to be successful.

To this uninterested observer, it looks like your primary motivation is not for Killington to be successful, but rather to continue skiing for an increasingly tiny cost per day/year with no incremental expense. If you truly wanted the Killington which currently exists to be successful, then you would focus your efforts on the successors of the entity with whom you entered into a "contract" - that would be ASC.

Our goal is to continue to have our lifetime passes honored. We would prefer to have avoided legal action in order to do so. Nonetheless based on the analysis of our group and our legal team, we feel that we have solid grounds for continuing to have our lifetime ski passes honored at Killington.

I'm sure the members of your group think its solid, but they aren't really an unbiased party here. As for the legal team, who wouldn't want to get their name in the paper fighting the big, bad out-of-state corporation? You can't buy that sort of PR. I will be VERY surprised if the case against KSRP as a defendant isn't thrown out, while continuing on against ASC.

[Tin Woodsman]

Or shrewd business sense... I hate ticket scalpers too, but it doesnt seem to stop them.

But it's still blackmail. No one forces you to buy a ticket from a scalper - you can always watch from home. Besides, everyone hates scalpers anyway, and all they're doing is exploiting a market inefficiency. But KSAA is playing the "little guy against evil out-of-state corporation" card, so it's even more egregious, and pretty cynical.

[Stormchaser]

Or shrewd business sense... I hate ticket scalpers too, but it doesnt seem to stop them.

But it's still blackmail. No one forces you to buy a ticket from a scalper - you can always watch from home. Besides, everyone hates scalpers anyway, and all they're doing is exploiting a market inefficiency. But KSAA is playing the "little guy against evil out-of-state corporation" card, so it's even more egregious, and pretty cynical.

KSRP has the option of duking it out or paying them off... Theoretically, KSRP could just stand by and wait for the courts to find in their favor (watch at home). Big risk not defending yourself, but you could choose to go that direction. Paying them off may be the easiest way to get what they want (buying a scalped ticket). Litigating their way through it is the other option (stubhub).

[Tin Woodsman]

KSRP has the option of duking it out or paying them off... Theoretically, KSRP could just stand by and wait for the courts to find in their favor (watch at home). Big risk not defending yourself, but you could choose to go that direction. Paying them off may be the easiest way to get what they want (buying a scalped ticket). Litigating their way through it is the other option (stubhub).

We're getting off track here, but that's an awful analogy.

Unless KSRP gives KSAA what it wants, it's going to pay in the form of legal costs and public image. That's a slightly more sophisticated version of a protection racket whereby unless you pay off the mob, they kick your ass. Either way, you lose. In a similar manner, the only way KSRP can "win" here is by a complete and total vindication in court, and even then, some of the residual damage will have been done.

As for scalpers, no one is forcing the ticket buyer into the transaction. They are willingly entering into it. KSRP is not willingly entering into this lawsuit. There is no comparison.

[Bubba]

... I will be VERY surprised if the case against KSRP as a defendant isn't thrown out, while continuing on against ASC.

A State court judge probably heard motions for dismissal before he heard the motion to move the case to Federal court. Judge Sessions, in Federal court, probably heard motions for dismissal before scheduling depositions and hearing other motions such as the motion to set this as a class action suit. One has to assume at this point that the judge would have dismissed one or more of the defendents if he was going to do that at all. Of course the judge, after hearing Plaintiff's case, could still dismiss at a later date. In other words, at least through the preiliminaries of this case, the judge feels there's enough of a case to go forward with all the defendents still in place.

[Bubba]

There are various tests to determine what is or isn't an asset sale. The continuing employees, continuing name, etc. all enter into the tests. That will be part of the determination as to whether or not this was truly an asset sale.

How could it not be an asset sale? When it was purchased by Otten, S-K-I Ltd. included Killington, Mt. Snow, Haystack, Waterville Valley and a controlling interest in Sugarloaf. Haystack and WV had already been sold off years ago. The sale of Mt. Snow to Peaks was announced on Feb 17, 2007, just four days prior to the K sale announcement, and didn't close until several months later. The sale of Sugarloaf wasn't even announced until June of 2007. Accordingly, unless KSRP wanted to buy Sugarloaf and arguably Mt. Snow as well, its only choice was an asset deal. It could not have pursued a stock deal with ASC that would have retained the lifetime pass obligation. The use of continuing employees and the brand name are such small factors as to be nearly irrelevant, b/c that happens with a significant % of asset deals involving a going concern.

My recollection is that each ski area retained an individual corporate status as a subsidiary of ASC with ASC owning all the stock of each earlier corporation. That is why ASC was a successor to Killington Ltd. and S-K-I and ASC had to honor the passes.

My point in raising the environmental liability issue is that new ownership may have more at stake here than the passes if they lose, thus they might want to consider a settlement. Of course, based on what we know so far of Cumming and Company in Utah, the word "compromise" does not appear in their vocabulary.

It won't just be new ownership that has something at stake here. If the Court were to rule that KSRP has no ability to leave the environmental issues behind, then that would threaten to invalidate similar constructs in other asset deals. I assure you that such a decision would not proceed blithely unopposed. It's a construct that is fundamental to M&A work and which appears in the preponderance of asset deals.

Based on the facts that I've seen, I would counsel Cumming to continue fighting this but to get his side of the story out a little more clearly. All of the stories I've read in the press seem to leave unchallenged the notion that b/c ASC honored the passes then there is some sort of implicit obligation for KSRP to do so. If there is a bad guy here, it's ASC, not Cumming (for a change).

Were this case to end up determining that the deal was not an asset sale, one would have to look at the individual circumstances of this deal versus others constructed as asset sales in order to reach the same conclusion. There may be very specific circumstances in this case that are non-existent in others. As for the environmental liability, my statement was purely conjecture as there may be other documents that specify environmental responsibility separate and apart from the alleged asset sale itself. If not, one could suppose that Powdr purchased not just the assets but the liabilities as well. That remains to be seen. Remember, SP Land has an ownership position here too as they purchased the whole shebang (allegedly only the assets) and then brought Powdr in after the fact and set up KSRP. The legal trail is certainly tangled any way you look at it.