IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: CORDILLERA GOLF CLUB, LLC, d/b/a

The Club at Cordillera Debtor. ) ) ) ) ) ) ) Chapter 11 Case No. 12-11893-CSS

Re: Docket Nos. 59, 89, and 96 Hearing Date: July 19, 2012 at 2:00 p.m. Alpines Objection Date: July 13, 2012, at 5:00 p.m.

OBJECTION OF ALPINE BANK TO THE EMERGENCY MOTION OF THE DEBTOR FOR ENTRY OF INTERIM AND FINAL ORDERS PURSUANT TO 11 U.S.C. 105, 361, 362, 363(c), 364(c), 364(d), AND 364(e) AND FED. R. BANKR. P. 2002, 4001 AND 9014 (I) AUTHORIZING DEBTOR TO OBTAIN POST-PETITION SECURED FINANCING, (II) GRANTING SECURITY INTERESTS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (III) GRANTING ADEQUATE PROTECTION TO PRE-PETITION SECURED PARTIES, (IV) AUTHORIZING THE USE OF CASH COLLATERAL AS PROVIDED HEREIN, AND (V) SCHEDULING A FINAL HEARING Alpine Bank (Alpine), by and through its undersigned counsel, submits this objection (the Objection) to the Emergency Motion of the Debtor for Entry of Interim and Final Orders Pursuant to11 U.S.C. 105, 361, 362, 363(c), 364(c), 364(d), and 364(e) and Fed. R. Bankr. P. 2002, 4001 and 9014 (I) Authorizing Debtor to Obtain Post-Petition Secured Financing, (II) Granting Security Interests and Superpriority Administrative Expense Claims, (III) Granting Adequate Protection to Pre-Petition Secured Parties, (IV) Authorizing the Use of Cash Collateral as Provided Herein, and (V) Scheduling a Final Hearing [Dkt. No. 59] (the DIP Motion).1 In support of the Objection, Alpine respectfully states as follows:

Unless specified otherwise, all capitalized terms not defined herein shall have the meanings ascribed to them in the DIP Motion. All references to Chapter and Section are to the Bankruptcy Code, 11 U.S.C. 1011532. All references to Bankruptcy Rule are to the Federal Rules of Bankruptcy Procedure, as presently in effect.

DMWEST #9140625 v3

PRELIMINARY STATEMENT 1. Granting post-petition financing on a priming basis is extraordinary, and is

allowed only as a last resort. Because it is an extraordinary event, a debtor carries a heavy burden of demonstrating, among other things, that the proposed post-petition loan facility is fair, necessary, and appropriate under the specific circumstances. Due to the extraordinary nature of such relief, motions under Section 364(d) of the Bankruptcy Code demand a critical and thorough evaluation to determine whether the relief should be granted. 2. Like many debtors, the Debtor seeks additional capital to maintain its operations.

Here, however, the proposed DIP Loan cannot be justified as a sensible exercise of the Debtors business judgment due to its onerous terms, and the Debtors inability to operate at a positive cash-flow level, even with the loan. In fact, even a cursory review of the proposed transaction should lead one to quickly conclude that the Debtor risks its own survival by jumping blindly into a commercially unreasonable financing transaction that also fails to comply with the Bankruptcy Code and Bankruptcy Rules. Even worse, the proposed DIP Loan would cause significant harm to the Debtors pre-petition lenders, mainly Alpine, and the Debtors unsecured creditors. Put simply, the DIP Loan, at best, is an expensive way for the Debtor to tread water over a 52-week period, and, at worse, it impedes the Debtor from reaching a sensible resolution of this case and achieving its publicly-stated goal of reorganization. 3. Moreover, in addition to the DIP Loans failure to be a reasonable exercise of the

Debtors business judgment, the proffered adequate protection to Alpine is in fact inadequate. The Debtor devotes a significant portion of its DIP Motion to the argument that Alpine is adequately protected due to a significant equity cushion. Even assuming that there is an equity cushion, an equity cushion by itself does not mandate approval of the DIP Motion. Rather,

courts have routinely held that an additional, and important, inquiry is whether the Debtor has reasonable prospects of reorganization. This inquiry is important because a DIP loan, particularly a priming DIP loan, should assist a debtor in achieving a successful reorganization. Here, based on the onerous terms of the DIP Loan and the Debtors proposed 52-week budget, the only plausible conclusion is that the Debtor has little, if any, hope of restructuring its debts. Indeed, at the end of the Debtors 52-week budget period, all that will have been accomplished is that the Debtor will be $4.7 million further in debt. 4. Further, as to the alleged equity cushion itself, the Debtor asserts that the value of

the subject real property is $33 million and, thus, Alpine is allegedly oversecured. It appears, however, that the Debtors appraisal is not a true as is valuation, and overstates the propertys value as collateral. 5. In short, entering into the DIP Loan would be a bad business decision by the

Debtor, and would cause significant harm to its estate. This Court should therefore deny the DIP Motion. RELEVANT BACKGROUND A. The Debtors Property 6. The Debtor is the owner and operator of The Club at Cordillera (the Club),

located in Edwards, Eagle County, Colorado. The Club includes three 18-hole golf courses; a short course; three tennis centers; fitness facilities; five indoor and outdoor pools; a summer camp with clubhouse for children; and riding, hiking and cross-country ski trails. (See Dkt. No. 2, Decl. of Daniel L. Fitchett, Jr. in Support of Chapter 11 Petitions and First Day Relief (Fitchett Declaration) at 7.)

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The Club is located within the Cordillera residential community in Edwards,

Colorado, and derives revenues through fees and dues related to Club memberships and marketed to community residents and others. (Id., at 5, 6, 812.) B. The Debtors Chapter 11 Case 8. On June 26, 2012 (the Petition Date), the Debtor filed a voluntary petition for

relief under chapter 11 of the Bankruptcy Code in the District of Delaware citing the maturity of the Loan and decreased membership revenues as the major factors contributing to the bankruptcy filing. (Id., at 39-41.) 9. The Debtor is authorized to continue to operate its business and manage its

financial affairs as a debtor-in-possession under Sections 1107(a) and 1108. No trustee or examiner has been appointed. 10. A statutory committee of unsecured creditors was appointed on July 6, 2012 (the

Committee). The Committee consists of seven unsecured creditors: six individuals and one limited-liability company. According to the Notice of Appointment of Committee of Unsecured Creditors, each member of the Committee resides in Colorado and, more specifically, Edwards County, Colorado. (Dkt. No. 86.) The Committee is seeking to employ Munsch Hardt Kopf & Harr, P.C. and Saul Ewing LLP as their counsel. (Dkt. Nos. 13233.) C. The Alpine Loan Agreement 11. In June 2009, the Debtor borrowed $13.7 million from Alpine (the Loan), for

the purchase and development of the Club. The Loan was secured by, among other things, (a) all of the Debtors real and personal property associated with the Club, and (b) guaranteed by, among others, David Wilhelm. (See e.g. Appendix to Cash Collateral Mot. [Dkt. No. 11] at Exs.

A-H (attaching copies of the Loan Agreement and certain other relevant security documents).) On information and belief, Mr. Wilhem is the Debtors manager and equity owner. 12. In connection with the Loan, and pursuant to the documents relating to the Loan

(the Loan Documents), including security agreements, a deed of trust, and financing statements, Alpine was provided a first-priority perfected security interest in and lien on the Debtors real and personal property associated with the Club, as more fully described in the Loan Documents (the Alpine Collateral). 13. As of the Petition Date, Alpine is owed over $12.7 million, plus costs and

expenses. Until paid in full, that amount will continue to accrue interests, costs, and expenses (including reasonable attorneys fees) to the extent of the equity, if any, in the Alpine Collateral. D. The Proposed DIP Loan 14. Six-days after the Petition Date, the Debtor filed the DIP Motion seeking

authority to obtain post-petition financing from an affiliate of Northlight Financial (the DIP Lender) on an interim and final basis (the DIP Loan). The DIP Loan is subject to the terms generally outlined on the DIP Term Sheet. The DIP Term Sheet, however, does not adequately describe all of the material terms. The [Debtor] acknowledges that the attached Term Sheet is intended to be a substantive outline of the transaction rather than a full and complete description of all terms of the Loan Documents, which shall contain such representations, warranties, covenants, events of default, and other provisions as Northlight deems necessary and appropriate in the context of the proposed transaction. (Dkt. No. 59, Exh. A to the DIP Motion, page 3 of the cover letter from Northlight to Mr. Wilhem (emphasis added).)

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Moreover, the Debtor has not yet filed the finalized loan documents to the DIP

Loan. Thus, creditors have not been afforded an opportunity to analyze the final loan documents before submitting an objection. 16. The DIP Term Sheet nevertheless contemplates that the DIP Lender will loan the

Debtor up to $4.7 million on a final basis. The DIP Loan has a 12-month maturity, but may become due before the maturity date upon (a) an event of default; (b) the sale of any collateral pursuant to a Section 363 sale; or (c) the effective date of a confirmed plan of reorganization. Interest is charged in the amount of 16% per annum on a monthly basis, with default interest established at 22%. (DIP Term Sheet at 1-2.) 17. The DIP Term Sheet also contemplates a priming lien on all real and personal

property of the Debtor, including the Alpine Collateral, senior to all pre-petition liens and security interests, including the liens and security interests of Alpine Bank (the Priming Lien). On information and belief, the only other creditor alleging a lien on and security interest in all of the real and personal property of the Debtor is David Wilhem, and on information and belief he has consented to the Priming Lien. 18. The DIP Lender is guaranteed up to $376,000 in interest payments (50% of the

total interest under the one-year DIP Loan), even if the Debtor terminates the DIP Loan early, as an Exit Fee. (Id., at 2.) 19. The DIP Term Sheet also contemplates the payment of a variety of lucrative fees

and expenses to the DIP Lender, including (a) a 2% origination or commitment fee; (b) indemnification of the DIP Lender for legal expenses and costs arising out of the financing transaction; (c) a $50,000 Due Diligence Deposit to cover the DIP Lenders legal investigation

into the Debtors financial information and collateral; (d) and a 2% extension fee, should the Debtor desire to extend the financing by an additional six months. (Id., at 2, 4-5.) 20. The DIP Term Sheet fails to adequately describe certain material terms. In

particular, the DIP Term Sheet does not provide the terms of the (a) Representations and Warranties; (b) Covenants; and (c) Events of Default. Instead, it merely notes that such

provisions will be the usual and customary for facilities and transactions of this type. (Id., at 3.) The DIP Term Sheet is also silent as to all of the remedies provided to the DIP Lender upon such default. E. The Debtors 52-Week DIP Budget 21. According to the Debtors 52-week DIP budget (the Budget), the Debtor

projects that it will begin the post-closing period, before drawing any DIP financing, with $234,683 in cash. (Dkt. No. 96.) After drawing on the full DIP Loan, at the end of the 52-week period, the Debtor projects that it will have $215,055 in cash: in other words, the Debtor will have spent a year treading water while going $4.7 million further into debt. The Budget does not contemplate any repayments of the DIP Loan (other than the monthly interest payments) during the 52-week period. Nor does the Budget contemplate any principal payments to Alpine. Thus, by obtaining the DIP Loan, all that the Debtor achieves is to continue to operate at a loss with rapidly mounting debt. 22. The Budget also reflects the need to pay property taxes assessed for 2011 in the

amount of $431,890. The Budget, however, does not appear to reflect any accrual or provision for payment of 2012 or 2013 property taxes. Adding in an accrual for 2012 and 2013 property taxes, an amount on information and belief equal to roughly $600,000, the Debtor will have operated at an even greater loss over the 52-week period than reflected in the Budget.

F.

The Adversary Proceeding 23. The Debtor initiated Adversary Proceeding No. 12-50785 (the Adversary

Proceeding) against Alpine asking the Court to determine the validity, priority, and extent of Alpines liens in the Debtors personal property, and to avoid any of Alpines liens solely in the Debtors personal property. (Dkt. No. 60.) In its complaint, the Debtor asserts that Alpine did not properly perfect its lien in the Debtors personal property. Alpine does not agree with the validity of that complaint, and it intends to file the appropriate response within the deadline to file such responsive pleading. G. Motion to Transfer Venue 24. Seven-days after the Petition Date, certain individual current as well as former

Club members (the Member Representatives), filed a motion (the Member Representatives Venue Motion) to transfer venue of this case to the District of Colorado. (Dkt. No. 69.) 25. Alpine filed a Joinder to the Member Representatives Venue Motion (the First

Joinder). (Dkt. No. 76.) 26. Three-days after the Member Representatives Venue Motion, the Cordillera

Property Owners Association and Cordillera Metropolitan District filed a motion to transfer venue to the District of Colorado and joinder to the Member Representatives Venue Motion (the CPOA Venue Motion). (Dkt. No. 77.) 27. Alpine filed a joinder to the CPOA Venue Motion (the Second Joinder, and

collectively with the Member Representatives Venue Motion, the First Joinder, and the CPOA Venue Motion, the Venue Motions). (Dkt. No. 95.) H. Collateral Value 28. The Debtor asserts that its real property alone has an as is value of $33 million.

OBJECTION 29. The Debtor seeks approval to obtain post-petition financing from the DIP Lender Section 364(d) provides

under Section 364(c)(2) and Section 364(d) of the Bankruptcy Code.

that a debtor may incur debt secured by a priming lien, and in relevant part provides that: the court, after notice and a hearing, may authorize the obtaining of credit obtaining of credit or the incurring of debt secured by a senior or equal lien on property of the estate that is subject to a lien only if (A) the trustee is unable to obtain such credit otherwise; and (B) there is adequate protection of the interest of the holder of the lien on the property of the estate on which such senior or equal lien is proposed to be granted. 11 U.S.C. 364(d)(1) (emphasis added). Among other burdens, [a] debtor has the burden to establish that the holder of the lien to be subordinated has adequate protection. The Resolution Trust Corp. v. Swedleand Dev. Group, Inc. (In re Swedeland Dev. Group, Inc.), 16 F.3d 552, 564 (3d Cir. 1994). The Debtor cannot satisfy this or its other substantive burdens, and has not met its procedural obligations. A. The Debtor Has Failed to Comply with Bankruptcy Rule 4001. 30. Bankruptcy Rule 4001(c) provides that a motion for approval of post-petition

financing . . . shall be accompanied by a copy of the agreement and a proposed form of order. Fed. R. Bankr. P. 4001(c)(1) (emphasis added). 31. Here, the Debtor has not yet provided final copies of the DIP Loan documents.

Specifically, the Debtor has not provided copies of the Credit Agreement, Security Agreements, and Pledge Agreements. Instead, the Debtor provides an outline of the proposed terms in the form of the DIP Term Sheet. That term sheet, however, does not contain a full and complete description of all the terms of the loan documents. (See Exh. A to the DIP Motion, page 3 of the cover letter from Northlight to Mr. Wilhem.) Thus, Alpine must assume that the Debtor and the DIP Lender are still negotiating the final terms of the DIP Loan. As a result of these

continued negotiations, Alpine, as well as all other creditors and parties-in-interest, have not been afforded an opportunity to see, much less analyze, the final and complete loan terms. 32. Moreover, Bankruptcy Rule 4001(c)(2) requires the Debtor to provide a concise

statement of the relief requested, that lists or summarizes, and sets out the location within the relevant documents of, all material provisions of the proposed credit agreement, including events of default. In spite of this basic requirement for seeking extraordinary relief in the form of a priming lien, the Debtor fails to provide the terms of certain material provisions, including (a) Representations and Warranties; (b) Covenants; (c) Events of Default; and (d) the DIP Lenders remedies in the event of a default. The DIP Term Sheet instead merely notes that such

provisions will be the usual and customary for facilities and transactions of this type.2 That statement alone, however, does not allow creditors to properly evaluate the proposed DIP Loan. 33. Because the Debtor failed to comply with Bankruptcy Rule 4001, this Court

should deny the DIP Motion.

In the proposed order granting the DIP Motion, the Debtor does indicate that the Events of Default include, among other things, (a) the occurrence of any other Event of Default under the DIP Credit Documents which is not cured as provided there in or waived; and (b) the dismissal of the Case, conversion of the Case to chapter 7, or the appointment of a chapter 11 trustee or an examiner with expanded powers in the Case. (Proposed Order, at 17, 23(b) & (e).) While this is not sufficient to comply with Bankruptcy Rule 4001, it is worth noting that certain of these Events of Default are not permitted. The court in In re Ames Dep't Stores, Inc., 115 B.R. 34 (Bankr. S.D.N.Y. 1990), for example, explained that: It is . . . the practice of this [c]ourt not to approve financing arrangements containing clauses triggering default on the appointment of a trustee or examiner section 1104. Such entrenchment of management may not be in the best interests of the estate and only precludes parties-in-interest from seeking to redress fraud or gross mismanagement through such an appointment.

115 B.R. at 38 (emphasis added).

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B.

The DIP Motion Does Not Demonstrate that the Debtor Made an Adequate Search for Better Financing Options. 34. To obtain court approval for a financing secured by the Priming Lien under

Section 364(d), the Debtor must establish an inability to obtain the necessary credit by any method other than having such financing secured by such lien. The DIP Motion makes no such showing. Rather, to convince this Court that its efforts were sufficient, the Debtor relies

exclusively on conclusory statements that are not supported by the record, much less a declaration from the Debtor, its principals, or agents. For example, the Debtor alleges that: Prepetition, the Debtor endeavored to identify potential sources of postpetition financing. Based on discussions with potential lenders, the Debtor has determined that adequate postpetition financing on an unsecured basis or on a junior priority basis to the Prepetition Lenders is not available. (DIP Motion at 18, 24.) Following the receipt of the proposal from the DIP Lender, and in light of the undesirable terms offered by the other proposed lenders, the Debtor proceeded to expeditiously negotiate with the DIP Lender. (Id. at 20, 27.) The Debtor ultimately concluded that the DIP Loan represented the best available financing for the Debtor under the circumstances. (Id.) In the weeks prior to the commencement of this case, the Debtors financial advisors pursued efforts to find replacement financing that would also provide additional debtor-in-possession funding and in that regard contacted a number of potential lenders with the capability of providing a debtor-in-possession facility. As a result of those efforts, the Debtor and its advisors received at least four proposals from lender groups considering providing postpetition financing to the Debtorincluding the DIP Lender. (Id. at 21, 30.)

The Debtor, however, fails to disclose specific information regarding its efforts to obtain financing on better terms. The Debtor provides no evidence regarding under what terms it sought post-petition financing, the number of potential lenders that were initially approached, and why certain proposals were deemed unsatisfactory.

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35.

By not sufficiently demonstrating that it made reasonable efforts to obtain

financing on better terms than those of the DIP Loan, this Court should not approve the DIP Motion. Indeed, such a result is consistent with the views of other courts on this issue: Although a debtor is not required to seek credit from every possible resource, a debtor must show that it made a reasonable effort to obtain post-petition financing from other potential lenders on less onerous terms and that such financing was unavailable. A court must make its decision as to [h]ow extensive the debtors efforts to obtain credit must be on a case-by-case basis. Suntrust Bank v. Den-Mark Constr., Inc., 406 B.R. 683, 691 (E.D.N.C. 2009) (internal citations omitted); see also In re 495 Cent. Park Ave. Corp., 136 B.R. 626, 63031 (Bankr. S.D.N.Y. 1992) (Section 364(d)(1) does not require the debtor to seek alternate financing from every possible lender. However, the debtor must make an effort to obtain credit without priming a senior lien); In re Stacy Farms, 78 B.R. 494, 498 (Bankr. S.D. Ohio 1987) (holding that a debtor failed to carry its burden under Section 364(d) where there was no evidence that the debtor had applied for loans from institutions other than its pre-petition senior lender and the proposed priming lender). 36. Moreover, with an alleged real property value of $33 million, and the consent of

the only other secured creditor regarding such property to the Priming Lien, the Debtor has not demonstrated why Alpine needs to be primed as well for a $4.7 million loan. C. The DIP Loan Terms Are Note Fair, Reasonable, and Appropriate. 37. Certain terms of the DIP Loan are onerous and commercially unreasonable and,

thus, may result in a significant diminution of the value of the Debtors estate to the detriment of Alpine and the unsecured creditors. 38. Above-market interest rates. The DIP Loan provides for a 16% interest rate, and

22% default rate. The proposed interest rates exceed the effective rates charged by lenders for

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loans in other Chapter 11 cases. (See Cases Cited by the Official Committee of Unsecured Creditors in their Objection to the DIP Motion, Dkt. No. 147, at p. 6, 16.) 39. Commitment Fee. The DIP Lender is entitled to a Commitment Fee of 2% of the

DIP Loan Amount$94,000. This fee, however, is required even if the DIP Lender never advances the entire amount of the DIP Loan to the Debtor. A commitment fee equal to 2.0% of the DIP Loan Amount . . . will be earned by Northlight upon the issuance by Northlight of a binding commitment to provide the DIP Loan, and due and payable at closing. . . . 40. Term. The DIP Term Sheet provides that the DIP Loan matures one-year from

the Closing Date but in all events the entire outstanding DIP Loan Amount is due and payable upon: (i) an event of default; (ii) the sale of any Collateral pursuant to a 363 Sale; or (iii) the Effective Date of a confirmed plan of reorganization. The Debtors public statements indicate that, at least at the time it commenced this proceeding and negotiated the DIP Loan, it intended to sell one of its Club facilitiesthe Mountain Courseunder Section 363 of the Bankruptcy Code. (Dkt. No. 2, Fitchett Decl., at 41, 42.) If that were to occur, the DIP Loan maturity would then accelerate. Thus, by negotiating a DIP Loan that allows the loan maturity date to be triggered if the Debtor moves forward with its stated restructuring goal of a Section 363 sale, one must question whether the Debtor has put much thought into how it will restructure its debts, as well as any thought into how certain provisions of the DIP Loan affect its restructuring goals. 41. Extension Fee. The DIP Term Sheet provides that the Debtor may extend the

term of the loan for an additional six months, provided that the Debtor pays the DIP Lender a 2% extension fee. After comparing the Debtors proposed 52-week budget with this provision, one must conclude that this fee is unreasonable given that the Debtor will only have around $215,000 at the end of its 52-week budget. Payment of the extension fee would reduce that amount to

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$121,000. As a result, the Debtor would be left with $121,000, yet be confronting restructuring of over $22 million in secured debt. 42. Inability to Obtain Additional Post-Petition Financing. The Debtor is also

prohibited from incurring any other secured or unsecured debt outside of the budget without first obtaining the DIP Lenders approval. The Debtor, like most debtors, needs additional capital to reorganize. Indeed, the Debtors own budget demonstrates that the DIP Loan does not enable the Debtor to return to profitability. Adding in an accrual for 2012 and 2013 taxes, an amount on information and belief equal to roughly $600,000, the Debtor will have operated at a loss over the 52 weeks. Thus, unless the Debtors equity owner is able to generate a significant amount of cash, the Debtor will need to obtain additional financing if it hopes to reorganize. By entering into a DIP Loan that prohibits the Debtor from obtaining additional financing, which everyone knows it will need to reorganize, the proposed loan facility effectively provides complete control of the Debtors restructuring efforts to the DIP Lender. 43. It is well-established, however, that courts cannot, under the guise of Section 364,

approve financing arrangements that amount to a plan of reorganization but evade confirmation requirements. In re Defender Drug Stores, 145 B.R. 312, 317 (B.A.P. 9th Cir. Ariz. 1992) (While certain favorable terms may be permitted as a reasonable exercise of the debtor's business judgment, bankruptcy courts do not allow terms in financing arrangements that convert the bankruptcy process from one designed to benefit all creditors to one designed for the unwarranted benefit of the postpetition lender.). Simply put, courts cannot condone situations in which the post-petition financing terms prejudice the powers and rights that the Bankruptcy Code confers for the benefit of all creditors, and leverage the Chapter 11 process by granting the

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DIP lender excessive control over the debtor or its assets so as to unduly prejudice the rights of other parties-in-interest. D. The Debtor Has Failed to Satisfy Its Burden of Proving that Alpine is Adequately Protected. 44. The essence of the adequate protection inquiry is whether a debtors priming

financing plan will provide the prepetition secured creditor with the same level of protection it would have had if there had not been post-petition superpriority financing. In re Swedeland Dev. Group, Inc., 16 F.3d at 564. [Thus], a proposal depending upon a prepetition lender having adequate protection, no matter its form, should as nearly as possible under the circumstances of the case provide the creditor with the value of his bargained for rights. Id. (internal citations omitted) (holding that debtors proposed adequate protection was insufficient where debtor offered no new consideration to [secured creditor] to offset its diminution of interest as a result of the superpriority lien given to [the DIP lender]). 45. The fact that a secured creditor may be protected, in part, by the existence of an

equity cushion is not, by itself, sufficient to adequately protect the prepetition creditor whose bargained for rights are diminished by the granting of a priming lien to a DIP lender. See In re Stoney Creek Technols., 364 B.R. 882, 891 (Bankr. E.D. Pa. 2007) (citing In re Timber Products, Inc., 125 B.R. 433, 436 n.11 (Bankr. W.D. Pa. 1990), and noting that the mathematical computation of the equity cushion in the automatic stay context, where the secured creditors collateral is merely being used in the reorganization, was inappropriate in the priming DIP financing context where the secured creditors liens are being actively subordinated. See id at n.26; see also In re Swedeland Dev. Group Inc., 16 F.3d at567 n.17 (We do not, however, imply. . . that a creditor no matter how great its security can be adequately protected without receiving additional collateral or guarantees if the creation of a superpriority lien decreases its

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security). The Swedeland and Stoney Creek courts, therefore, recognized that an equity cushion is not dispositive of whether a secured creditor is adequately protected when that very purported equity cushion is being diminished by the debtors incurrence of post-petition, priming debt. See In re Stoney Creek Technols. 364 B.R. 891. 46. Bankruptcy courts consider the following factors to determine whether a secured

creditor, even in the face of a purported equity cushion, is in fact adequately protected: (i) Does the accrual of interest erode the equity cushion; (ii) Is the property depreciating or increasing in value; (iii) Has the debtor shown an inability to obtain refinancing since the filing; (iv) Has the debtor offered any other method of adequate protection; and (v) Do current economic conditions suggest no realistic prospect for successful rehabilitation or reorganization under Chapter 11.3 In re Stoney Brook Technols., 364 B.R. at 891 n.27, citing In re Timber Products, 125 B.R at 433-34 (and finding that among the factors relevant to the adequate protection analysis, the most significant in the debtors case was its prospects for a successful reorganization). 47. Where a debtor provides a prepetition secured creditor with no additional

adequate protection (aside from the collateral to which it was entitled originally) and the proposed DIP financing merely increases the secured obligations of the debtor without providing a realistic mechanism for a successful reorganization, the secured lender cannot be found to be adequately protected. See In re Stoney Brook Technols. 364 B.R. at 891-892 (finding that debtor had not met its burden of establishing that prepetition secured creditor was adequately protected
3

Courts also consider whether the Debtors conduct of the litigation has been more than a deliberate delay tactic. In re Stoney Brook Technols., 364 B.R. at 891 n.27. This factor does not appear applicable at this stage of the case.

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even assuming a substantial equity cushion where debtor could not operate profitably and would default on its obligations to the DIP Lender, thus impairing the secured creditor it sought to prime). 48. Here the Debtor has provided Alpine with no additional adequate protection aside

from its assertion that Alpine is adequately protected by an existing equity cushion. Given the eroding value of the Debtors property and the grossly unfavorable terms of the DIP Loan, Alpines bargained for rights are diminished as a result of the DIP Loan. 1. The Purported Equity Cushion Claimed By the Debtor is Less Than It Appears. As an initial matter, the Debtor relies on a Chrysalis Valuation Consultants, LLC

49.

appraisal report to support its position that the market-value of the subject property is $33 million. (Fitchett Decl. at 59.) The Debtor has provided such appraisal to Alpine, and it is under review. It appears, however, that such appraisal is not a true as is valuation, and overstates the propertys value as collateral.4 50. Moreover, whatever the value at this point, even the Debtor concedes that the

value of the property is rapidly eroding. Indeed, using numbers adopted by the Debtor, the property has already lost at least 34% of its appraised value in the last three years. (Fitchett Decl. at 21, 59.) 51. In addition, even if there is an equity cushion and, thus, Alpine is oversecured, its

claim would continue to increase due to the accrual of interest, fees, and costs. As a result, the equity cushion will continue to depreciate until such claims are paid in full.

On information and belief, an appraisal that is being prepared for Alpine will confirm this overstatement, but such appraisal is not yet completed.

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2.

The Terms of the DIP Loan Calls Into Question Debtors Ability to Reorganize. The terms of the DIP Loan call into question the Debtors ability to successfully

52.

reorganize and adequately protect Alpines secured position. As noted above, the termination provisions of the DIP Loan essentially foreclose the Debtors only currently stated path to reorganization, as a sale of the Mountain Course will accelerate the DIP Loan. 53. Moreover, if the Debtor is operating at a significant loss by the end of its 52-week

budget, there is then little, if any, hope for the Debtor to successfully restructure over $22 million in secured debt, and still provide a distribution to its unsecured creditors. Indeed, the Debtor indicates that no lender was willing to provide financing sufficient to repay the Prepetition Lenders Debt in full and provide additional liquidity sufficient for the Debtor to operate its business to preserve and maximize the value of its assets. (The DIP Motion at 22, 32.) Assuming that statement is true, how can the Debtor obtain additional financing at the end of a 52-week period, where it has continued to operate at a significant loss, with the additional encumbrance of the DIP Loan, when it was purportedly unable to find such financing prepetition? The answer is simplethe Debtor cannot. E. Alpines Alleged Non-Perfection in the Debtors Personal Property Does Not Excuse the Debtor from Providing Adequate Protection 54. The question of Alpines perfected status in the Debtors personal property is a

puzzling aside in these inquiries. The purported failure of Alpine to properly amend its UCC filing statement does not excuse the Debtor from providing Alpine adequate protection for its undisputed security interests in the Debtors largest assetits real property. Indeed, the more Alpine is dependent on the real property, the greater must be the showing that it is adequately protected with respect to its interest in such real property.

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F.

Reservation of Rights 55. Alpine is currently conducting discovery and has not yet been provided with a

copy of the final loan documents for the DIP Loan. Alpine therefore reserves the right to supplement and amend this Objection, and introduce evidence at the hearing for the DIP Motion. Alpine further reserves the right to respond, further object, join in, or amend any objection herein regarding any argument or objection made by any person relating to the DIP Motion.

[Remainder of the Page Intentionally Left Blank]

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CONCLUSION 56. For the foregoing reasons, Alpine respectfully requests that the DIP Motion be

denied, and the Court grant such other relief as may be necessary and proper. Respectfully submitted, BALLARD SPAHR LLP Dated: July 13, 2012 Wilmington, Delaware By: /s/ Joshua E. Zugerman_______________ Tobey M. Daluz, Esq. (No. 3939) Joshua E. Zugerman, Esq. (No. 5261) 919 North Market Street, 11th Floor Wilmington, DE 19801 Telephone: (302) 252-4465 Facsimile: (302) 252) 4466 E-mail: daluzt@ballardspahr.com zugermanj@ballardspahr.com and Vincent J. Marriott, III, Esq. (PA 41457) (admitted pro hac vice) Sarah Schindler-Williams Esq. (NY 4556510) (admitted pro hac vice) 1735 Market Street, 51st Floor Philadelphia, PA 19103 Telephone: (215) 665-8500 Facsimile: (215) 864-8999 E-mail: marriott@ballardspahr.com schindlerwilliamss@ballardspahr.com and Jon T. Pearson, Esq. (NV 10182) (admitted pro hac vice) 100 North City Parkway Suite 1750 Las Vegas, NV 89106 Telephone: (702) 471-7000 Facsimile: (702) 471-7070 Email: pearsonj@ballardspahr.com Attorneys for Alpine Bank

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ) Case No. 12-11893 CSS ) CORDILLERA GOLF CLUB, LLC, DBA ) Chapter 11 THE CLUB AT CORDILLERA, ) ) Debtor. ) ) ______________________________________________________________________________ CERTIFICATE OF SERVICE ______________________________________________________________________________ The undersigned hereby certifies that on July 13, 2012, the OBJECTION OF ALPINE BANK TO THE EMERGENCY MOTION OF THE DEBTOR FOR ENTRY OF INTERIM AND FINAL ORDERS PURSUANT TO 11 U.S.C. 105, 361, 362, 363(c), 364(c), 364(d), AND 364(e) AND FED. R. BANKR. P. 2002, 4001 AND 9014 (I) AUTHORIZING DEBTOR TO OBTAIN POST-PETITION SECURED FINANCING, (II) GRANTING SECURITY INTERESTS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (III) GRANTING ADEQUATE PROTECTION TO PREPETITION SECURED PARTIES, (IV) AUTHORIZING THE USE OF CASH COLLATERAL AS PROVIDED HEREIN, AND (V) SCHEDULING A FINAL HEARING was caused to be served as indicated on the attached Exhibit A.
Date: July 13, 2012 Wilmington, Delaware Respectfully submitted, BALLARD SPAHR LLP

/s/ Joshua E. Zugerman Tobey M. Daluz, Esq. Joshua E. Zugerman, Esq. Ballard Spahr LLP 919 N. Market Street, 11th Floor Wilmington, Delaware 19801 Tel: 302.252.4465 Fax: 302.252.4466 E-mail: daluzt@ballardspahr.com zugermanj@balladspahr.com Counsel for Alpine Bank

SERVICE LIST Via Hand Delivery: Michael R. Nestor, Esq. Joseph M. Barry, Esq. Donald J. Bowman, Jr., Esq. Kenneth J. Enos, Esq. Young Conaway Stargatt & Taylor, LLP Rodney Square 1000 N. King Street Wilmington, DE 19801 Mark D. Collins, Esq Zachary I. Shapiro, Esq. Richards, Layton & Finger, P.A. One Rodney Square P.O. Box 551 Wilmington, DE 19899 Mark S. Kenney, Esq. Office of the United States Trustee 844 N. King Street, Suite 2207 Lock Box 35 Wilmington, DE 19801 Damien Tancredi, Esq. Cozen & O'Connor, PC 1201 N. Market Street, Suite 1400 Wilmington, DE 19801 Matthew P. Ward, Esq. Ericka F. Johnson, Esq. Womble Carlyle Sandridge & Rice, LLP 222 Delaware Avenue, Suite 1501 Wilmington, DE 19801 Mark Minuti Saul Ewing LLP 222 Delaware Avenue, Suite 1200 P.O. Box 1266 Wilmington, DE 19899 Via First Class U.S. Mail: Arthur J. Abramowitz, Esq. Cozen & O'Connor PC Liberty View, Suite 300 457 Haddonfield Road Cherry Hill, NJ 08002

Harland Robins, Esq. Kristi Katsma, Esq. Dickinson Wright PLLC 500 Woodward Ave., Suite 4000 Detroit, MI 48226 Garry R. Appel, Esq Appel & Lucas, P.C. 1660 17th Street, Ste. 200 Denver, CO 80202 Brad W. Breslau, Esq Cozen & OConnor PC 707 17th Street, Suite 3100 Denver, CO 80202 Melissa Maxman, Esq. Ronald Wick, Esq. Cozen & OConnor PC 1627 I Street, NW Suite 1100 Washington, DC 20006 Christopher Celentino, Esq Erika Moribita, Esq. Mikel Bistrow, Esq. Foley & Lardner LLP 402 W. Broadway Suite 2100 San Diego, CA 92101 Erika L. Morabito, Esq. Brittany J. Nelson, Esq. Foley & Lardner LLP 3000 K Street, NW, Suite 600 Washington, DC 20007-5143

Acushnet Company Attn: President, Officer or Managing Agent P.O. Box 88111 Chicago, IL 60695 Ceres Design & Arborscape LLC d/b/a Land Designs by Ellison Attn: President, Officer or Managing Agent P.O. Box 2134 Eagle, CO 81631-2134 Colorado Dept. of Labor & Employmen Attn: Bankruptcy Unit 251 East 12th Avenue Denver, CO 80203-2202 Colorado Motor Parts Attn: Susan P.O. Box 186 Frisco, CO 80443 Cox, Castle & Nicholson LLP Attn: President, Officer or Managing Agent 2049 Century Park East, 28th Floor Los Angeles, CO 90007-3284 Department of Treasury Internal Revenue Service Ogden, UT 84201-0030 Eagle County Treasurer Attn: President, Officer or Managing Agent P.O. Box 470 Eagle, CO 81631 James J. Holman, Esq Duane Morris LLP 30 South 17th Street Philadelphia, PA 19103-4196 Internal Revenue Service Insolvency Section 2970 Market Street PO Box 7346 Philadelphia, PA 19101-7346

River Centre Development Attn: Dan Siefers 27 Main Street Edwards, CO 81632 Secretary of State Division of Corporations Franchise Tax Division 401 Federal Street - Suite 4 P.O. Box 898 Dover, DE 19903 Securities & Exchange Commission Attn: Office of the General Counsel (Bankruptcy) Centeral Regional Office 1801 California Street, Suite 1500 Denver, CO 80202-2656 Securities & Exchange Commission New York Regional Office Attn: George S. Canellos, Regional Director 3 World Financial Center, Suite 400 New York, NY 10281 The Rush Family Trust UTD May 8, 1985 Jeffrey L. Rush, Trustee Attn: Evan Stone, Esq. 12348 High Bluff Drive, Suite 100 San Diego, CA 92130 U.S. Secretary of Treasury Attn: Office of the General Counsel (Bankruptcy) 1500 Pennsylvania Avenue, NW Washington, DC 20220 US Dept. of the Interior Bureau of Reclamation Attn: President, Officer or Managing Agent Great Plains P.O. Box 301506 Los Angeles, CA 90030-1506

David Wilhelm 97 Main Street Suite E202 Edwards, CO 81632 John D. OBrien PO Box 2764 Edwards CO 81632 Cheryl M. Foley, PO Box 3000 Edwards CO 81632 Ken Ulickey 1016 Summit Trail Cordillera CO 81632 Kevin B. Allen 4502 S. Vine Way Englewood CO 80113 Dennis S. Meir 219 Aspen Meadows Road Edwards CO 81632 John S. Lemak 54 Penny Lane Cordillera CO 81632 Ceres Design & Arborscape, LLC Attn: William W. Reed PO Box 2134, 1040Chambers Avenue Eagle CO 81631 Russell L. Munsch Joseph J. Wielebinski Jay H. Ong MUNSCH HARDT KOPF & BARR, P.C. 3800 Lincoln Plaza 500 N. Akard Street Dallas, TX 75201-6659