UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ) ) CORDILLERA GOLF CLUB, LLC ) dba The

Club at Cordillera, ) ) Debtor. ) )

Case No. 12-11893 (CSS) Chapter 11

Re: Docket No. 8

OBJECTION OF CHERYL M. FOLEY, THOMAS WILNER, JANE WILNER, CHARLES JACKSON, MARY JACKSON and KEVIN B. ALLEN, INDIVIDUALLY AND AS REPRESENTATIVES OF A CERTIFIED CLASS OF MEMBERS, TO DEBTORS MOTION FOR AN ORDER, PURSUANT TO SECTIONS 105 AND 363 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6003, AUTHORIZING AND APPROVING (I) THE DEBTORS DESIGNATION OF ALFRED H. SEIGEL, AS CHIEF RESTRUCTURING OFFICER, AND (II) RETENTION AND EMPLOYMENT OF CROW HORWATH, LLC, NUNC PRO TUNC TO THE PETITION DATE

Cheryl M. Foley, Thomas and Jane Wilner, Charles and Mary Jackson and Kevin B. Allen, as representatives of a certified class in Case Number 11CV552, pending in the District Court of Eagle County, Colorado (collectively, Member Representatives), by their attorneys Richards, Layton & Finger, P.A. and Appel & Lucas, P.C., hereby object to the Debtors Motion for an Order, Pursuant to Sections 105 and 363 of the Bankruptcy Code and Bankruptcy Rule 6003, Authorizing and Approving (I) the Debtors Designation of Alfred H. Seigel, as Chief Restructuring Officer, and (II) Retention and Employment of Crow Horwath, LLC nunc pro tunc to the Petition Date (the Motion). INTRODUCTION 1. The Debtor, Cordillera Golf Club, LLC (Debtor), owns various recreational

amenities in the Cordillera residential community located in the heart of the Vail Valley in Eagle
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County, Colorado. The Cordillera community consists of several hundred single family homes. Integrated with the homes throughout the Cordillera community are a variety of recreational amenities, including golf courses, restaurants, swimming pools and the like. 2. The Debtor and the homeowners, including the Member Representatives, are

inextricably bound to one another. The amenities owned by the Debtor greatly affect the value of the homeowners homes and lifestyle. Moreover, the homeowners were the primary members of the Cordillera Club and hence its primary source of revenue (the Club Members). More than 600 Cordillera homeowners are or were members of the Debtor's club and each paid a substantial deposit to join, which the Debtor is contractually obligated to repay to the member. The current and former members are the most numerous creditors of Debtor and, in aggregate, by far the largest. 3. Unfortunately for everyone involved, the Debtors actions and misdeeds have

irretrievably soured its relationship with the members and other interested community constituencies. That has resulted in ongoing litigation between the Debtor and most of the stakeholders in this case. 4. The Cordillera Property Owners Association (CPOA), a group composed of

owners of real property in the Cordillera community, appointed an informal group to study the alternatives and to explore solutions with the Debtor. On October 20, 2010 this group incorporated as the Cordillera Transition Corporation (CTC). In May 2011, Debtors current management, under the control of David Wilhelm (Wilhelm), initiated a lawsuit as a brutal business tactic under the Colorado racketeer laws against both these civic organizations and their respected community volunteer members, claiming $96 million in damages.

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5.

Separately, the Member Representatives brought suit in June of 2011 against the

Debtor, Wilhelm, Patrick Wilhelm and several Wilhelm-controlled entities (the Class Action Litigation). The Members Representatives are the court certified representatives of the members in the class action litigation which seeks damages for the defendants breaches of contract and misrepresentations in connection with the defendants false solicitation of dues payments in 2011 and for damages in the amount of the membership deposits made upon joining the Debtor. In addition, the class litigation seeks damages for defendants false statements, contract breaches and violations of securities and consumer protection laws in connection with the sale of Premier Memberships in 2009-2010. 6. Debtors current management, under the control of Wilhelm, has lied to and

misled the Club Members too many times, misappropriated their membership dues and violated a Court order put in place to prevent the misuse of the dues. Wilhelm is subject to a contempt proceeding in Eagle County District Court for having spent the Debtors fund in violation of a Temporary Restraining Order and Preliminary Injunction entered by the Eagle County District Court (the TRO), and has demonstrated time and time again that he cannot act in a fiduciary capacity. The Debtor, under Wilhelms control, has burned its bridges with its customers the homeowners in Cordillera and the vast majority of these homeowners will not deal with a Debtor operated by Wilhelm. Several hundred have either resigned, refused to pay dues, or otherwise indicated they believe their membership agreements have been so materially breached that they are no longer binding. Without these Club Members, the Debtor does not have a viable business. The Debtor, however, has a chance at being reorganized, but only if the members return and the members will only return to the Club if Wilhelm is gone.

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ARGUMENT

7.

The acrimony that the Club Members feel toward the Debtor, and particularly

Wilhelm, is so great that the appointment of a CRO who serves under Wilhelm while Wilhelm remains in control of the Debtor would be utterly meaningless. The Member Representatives, on behalf of all of the Club Members, do not trust the business judgment of the Debtor or Wilhelm to any degree and will shortly file their motion for appointment of a Chapter 11 Trustee pursuant to sections 1104(a)(1) and (2) of the Bankruptcy Code to completely remove Wilhelm from any and all management or control of the Debtor. The parties opposing this motion take no position as to the qualifications or the integrity of Mr. Seigel or Crowe Horwath, LLC, but do question the Debtors motivation for seeking their appointment and the limited authority they are to be given. 8. The engagement letter attached to the Motion makes clear on page 1 that Siegal

shall serve at the direction of and report to its [the Debtors] sole managing member, who is Wilhelm. The engagement letter further provides on page 2 that [w]ith respect to CGC, however, the CRO and Crowe Partners and Representatives working on this engagement will operate under and pursuant to the direction of CGCs Manager. In other words, the debtor proposes to delegate certain responsibilities to a CRO, but all management authority and decision making power will be retained by Wilhelm. This is unacceptable to the Member Representatives. Wilhelm must be removed and replaced by a Trustee. 9. The Debtor acknowledges the extreme acrimony generated by Mr. Wilhelm

through his suit against the CPOA/CTC and by defrauding the Foley class members of their 2011 dues and Premier membership contributions. In paragraph 23 of the Motion, the Debtor proposes that the appointment of a CRO who answers to Wilhelm will somehow magically
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resolve the distrust and rage that Wilhelm has created among the Club Members. The Debtor states [g]iven the acrimonious nature of the litigation underlying the Debtors operations and the involvement of the Debtors principals in that litigation, the Debtor believes that immediately authorizing the employment of Mr. Siegel as CRO who has no currently [sic] involvement in the underlying litigation may avoid some of that same acrimony from immediately spilling into this chapter 11 case. See The Motion at 23. The Debtor further acknowledges that some independent party will need to evaluate the Debtors dealings with insiders such as Wilhelm, who asserts that he is a secured creditor of the Debtor, and Wilhelms family members. Id. The Debtor suggests that a CRO, answerable to Wilhelm, performing that function will be very helpful to the Debtors professionals in evaluating a course of action in relation to such clams. Id. The Debtor correctly identifies the problems in this case, but proposes the wrong solution. 10. This Debtor does not need assistance in evaluating a course of action. It needs

an independent decision maker. Apparently, the Debtor and Wilhelm are sufficiently aware of the obvious to have anticipated that the creditors in this case will seek to appoint a Chapter 11 Trustee, and offer to engage a CRO based upon the very same grounds which demand the appointment of a Trustee. That is not a sufficient solution. The acrimony present in this case and the self dealing of the Debtors management require the appointment of a independent Trustee who will have control of the Debtor and decision making powers, rather than a mere CRO who has only limited, delegated responsibilities. At a minimum, the Motion should be held in abeyance until the Court has considered a motion to appoint a Chapter 11 Trustee. 11. The Member Representatives will seek to have a Trustee appointed under

1104(a)(1) because the debtor (i.e. Wilhelm) has engaged in fraudulent conduct. The grounds for this request shall include:

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a.

Wilhelm was dishonest with the members, telling them one thing and

doing another. Particularly galling is the fact that he induced the members to pay nearly $8,000,000 in 2011 dues by promising that all of the Club Facilities would be opened and that the funds would be used solely for the operation and maintenance of the Club. That clearly was untrue; b. Wilhelm also filed a contrived lawsuit against CPOA, CTC (formed in

October 2010) and volunteer community members for allegedly conspiring to induce Members to leave Cordillera as the ostensible cause for his inability to operate the Club profitably. However, as the Debtors TRO filing shows, Wilhelm had already concluded by mid-2010 that the Club had insufficient members to operate; and c. Wilhelm has misused the Debtors assets for his own benefit, both pre-

petition and post-petition. Pre-petition, he used the Debtors funds in violation of the TRO in the Class Action Lawsuit to pay his own attorneys despite the fact that the TRO expressly prohibited doing so. That pattern has continued post-petition with the filing of the Adversary Proceeding, the sole purpose of which was to attempt to use the Bankruptcy of the Debtor to shield Wilhelm personally from the consequences of his contempt for the Eagle County District Court; d. Wilhelm has demonstrated without question that he is willing to blatantly

disregard court orders when it suits his needs. Despite the TRO in the Class Action Litigation, which specifically enjoined Wilhelm and the Debtor from misusing the members dues, they ignored the order and used the funds. The Eagle County court on July 20, 2012 will hear evidence whether Wilhelm misappropriated more than $200,000

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for his own benefit in violation of the TRO. Evidence will also be presented that Wilhelm pocketed or directed payment to his son, Patrick Wilhelm, more than $1,200,000 in the months leading up the TRO. Evidence will show that all these funds were paid to Wilhelm at a time when he was telling the Club members that operational cutbacks were needed because cash was short. Whether or not Wilhelm is held in criminal or civil contempt by the Eagle County court, the Cordillera community is outraged by his actions and this makes him unsuitable as a Debtor in possession. 12. The Member Representatives shall also request the appointment of a Trustee

pursuant to 1104(a)(2) due to the extreme acrimony in this case and the need for an independent review of the Debtors dealings with insiders. The grounds for this request shall include: a. In the present case, there is enormous acrimony that has arisen between

Wilhelm and the entire Cordillera community. Wilhelm sued and is pursuing the CTC litigation, which is based on community members criticism of Wilhelms actions in operating the Club. Wilhelm, personally, and the Debtor are defendants in the Class Action Litigation brought by the Member Representatives on behalf of the certified class of approximately 609 members and former members of the Club. Wilhelm has thus irretrievably alienated the entire Cordillera community. The animosity and acrimony are hugely significant in this case because the members are the Clubs customers. Without them, there are no revenues and there can be no Club; b. Wilhelm claims to be a secured creditor of the Debtor to the tune of more

than $6,500,000, plus interest. There are substantial issues about this alleged debt, including whether it can be avoided as a fraudulent transfer under applicable law. Thus, Wilhelms alleged status as a secured creditor creates a significant conflict of interest. In

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addition, Wilhelm and Wilhelm-controlled entities have guaranteed the Alpine Bank debt. This status creates yet another conflicting loyalty; c. That Wilhelm and other current management of this Debtor cannot

properly act as the Debtor-In-Possession is illustrated by the recently filed Motion to obtain post-petition financing. The financing Motion requests authority to borrow $4.7 million from a DIP lender at 16% interest. The interest reserve, upfront fees and other borrowing costs, reduce the actual amount that will be funded under the proposed loan dramatically. It is also proposed that the DIP loan will be secured by a priming lien on the Debtors real property, the right to which is premised on the Debtors assertion that the Club is worth $33 million, a proposition that everyone other than the Debtor believes is absurdly optimistic. Thus, the DIP loan is very expensive and will do nothing but dig the Debtor a deeper whole to climb out of. 13. The Debtor only needs the DIP loan to fund losses occasioned by the Debtors

alienation of the members and to pay for attorneys fees to litigate with the members and other creditors. The alternative to this approach is obvious to everyone except the Debtor and Wilhelm. What is needed is an agreement that will bring the members back to the Club, immediately increase revenues and avoid the substantial litigation expense the Debtor otherwise plans to incur. Unfortunately, this Debtor, managed by Wilhelm, cannot arrive at an agreement with the Club Members or the other Cordillera community constituents, and the employment of a CRO, no matter how well qualified or how honest, cannot overcome Mr. Wilhelms personal problems with the Club Members. CONCLUSION For the Above noted reasons, the Motion should be denied.

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Dated: July 13, 2012 Wilmington, Delaware

/s/ Zachary I. Shapiro

Mark D. Collins (No. 2981) Zachary I. Shapiro (No. 5103) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Facsimile: (302) 651-7701 Email: collins@rlf.com shapiro@rlf.com

- and Garry R. Appel APPEL & LUCAS, P.C. 1660 17th Street, Suite 200 Denver, Colorado 80202 Telephone: (303) 297-9800 Email: Appelg@appellucas.com

Attorneys for the Member Representatives

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