[CONTENT REMOVED FROM ORIGINAL THREAD PLACED HERE] Legal debate thread for the ongoing Wyndham resort closure actions...

[Floridaman76]

Most timeshare sales weasels make used car salespeople look good IME.

And lawyers

 

[comicbookman]

And lawyers

But not those that have a tenuous relation to facts.

 

[comicbookman]

Does anyone else see multiple lawsuits and/or a major class action lawsuit against Wyndham over the fraudulent sales practices they're allowing to happen in conjunction with the resorts being dropped.

They will have to divulge every single owner, and their contact information, who owned at one of these resorts to any and all attorneys or attorney groups who file suits against them. Also possibly divulge the names and contact information of any owner who attended an update or sales presentation between July 10th when this was announced to the end of the year when the resorts will close.

Many Wyndham lawsuits are settled out of court so we have absolutely no idea how often that happens. Some do go to court and people win. It's not always as futile as sone people think and this one has an excellent chance of winning in my estimation.

If Wyndham's legal team is worth what they pay them, they'd be advising the PTB/ powers that be to issue a company wide statement that any concierge or salesperson caught using any such tactic concerning the closings will be fired on the spot. If ever a cya move was needed it would be this for Wyndham.

I agree with your advice recommendation, but given their lack of reeling in the sales people over the years I doubt it will be issued. I also doubt Wyndham is worried about lawsuits and discovery. It is a lot harder to get that kind of discovery than tv would lead you to believe.

 

[dioxide45]

For the umpteenth time, resorts filing Chapter 11 bankruptcy are NOT necessarily insolvent. From what we know so far, none of these resorts is insolvent. So, buying the resort out of bankruptcy is not what is happening.

So what is the end game then? I thought the plan was for most of the resorts that are filing Chapter 11 to be sold? Perhaps not sold due to insolvency, but still closed down and the property sold?

 

[chapjim]

So what is the end game then? I thought the plan was for most of the resorts that are filing Chapter 11 to be sold? Perhaps not sold due to insolvency, but still closed down and the property sold?

The end point is that the resort(s) will be sold, but not "sold out of bankruptcy." "Sold out of bankruptcy" implies insolvency.

 

[comicbookman]

The end point is that the resort(s) will be sold, but not "sold out of bankruptcy." "Sold out of bankruptcy" implies insolvency.

The difference is sold out of bankruptcy allows the cancelling of most debts, by court order, so a lot of people and companies don't get paid. A normal sale usually includes payment or assumption of that dept. So sold out of bankruptcy, owners could get nothing by court order as other creditors may have priority. A normal sale, owners will get a prorated share of any profit. Slightly over simplified, but that is the gist of the difference.

 

[dioxide45]

The end point is that the resort(s) will be sold, but not "sold out of bankruptcy." "Sold out of bankruptcy" implies insolvency.

I wouldn't necessarily say that it implies that. Many companies that file chapter 11 sell assets. This isn't any different. The bankruptcy judge still has to approve the sale.

 

[chapjim]

The difference is sold out of bankruptcy allows the cancelling of most debts, by court order, so a lot of people and companies don't get paid. A normal sale usually includes payment or assumption of that dept. So sold out of bankruptcy, owners could get nothing by court order as other creditors may have priority. A normal sale, owners will get a prorated share of any profit. Slightly over simplified, but that is the gist of the difference.

You're talking about Chapter 7, which allows cancellation of unsecured debt.

 

[comicbookman]

You're talking about Chapter 7, which allows cancellation of unsecured debt.

Yes, that is what sold out of bankruptcy implies. Chapter 11 allows for more flexibility and usually, if not dealing with a real insolvency, a more orderly debt resolution. It streamlines, the sale process by limiting, but not eliminating, the creditors ability to object. It also streamlines the varios court proceedings needed to facilitate a sale.

 

[dioxide45]

I suppose the law firm hired by the HOAs to handle the bankruptcies has some type of plan, but does anyone here really know how they plan to terminate the condominium/timeshare scheme under bankruptcy? How can chapter 11 bankruptcy eliminate the individual interval deeded ownerships of each owner? I just don't see how the condominium/timeshare scheme and deeds covered under state real estate laws can be wiped out by chapter 11 bankruptcy of the HOA. I even asked AI, and while it may not be right, it doesn't see bankruptcy as a path forward to eliminate the condominium/timeshare scheme.

This still seems to be the one unanswered question. Or at least I haven't seen the answer. Will the BOD come back to the well later to ask the owners to vote to end the timeshare scheme so they can sell the property?

 

[comicbookman]

I suppose the law firm hired by the HOAs to handle the bankruptcies has some type of plan, but does anyone here really know how they plan to terminate the condominium/timeshare scheme under bankruptcy? How can chapter 11 bankruptcy eliminate the individual interval deeded ownerships of each owner? I just don't see how the condominium/timeshare scheme and deeds covered under state real estate laws can be wiped out by chapter 11 bankruptcy of the HOA. I even asked AI, and while it may not be right, it doesn't see bankruptcy as a path forward to eliminate the condominium/timeshare scheme.

This still seems to be the one unanswered question. Or at least I haven't seen the answer. Will the BOD come back to the well later to ask the owners to vote to end the timeshare scheme so they can sell the property?

I don't see any issue. Bankruptcy courts routinely cancel or force the sale of the rights of stock holders, who are also owners.

 

[dioxide45]

I don't see any issue. Bankruptcy courts routinely cancel or force the sale of the rights of stock holders, who are also owners.

But those are covered under federal law, not necessarily deeded ownership which is at the state level. I also don't see how the bankruptcy court can force the sale of individual deeded interval rights when those owners aren't the ones declaring bankruptcy. Owning deeded timeshare interests is not like owning shares in a company. Did you even look at the link to the AI explanation that I included? Here is a snippet;

Timeshare-specific wrinkle​

• Some troubled timeshare HOAs have tried combining bankruptcy + termination motions, arguing that liquidation is in creditors’ best interest.
• Courts have generally said: “Not without following state termination statutes.”
• In other words, bankruptcy doesn’t short-circuit the owner-consent requirements built into state law.

 

[comicbookman]

But those are covered under federal law, not necessarily deeded ownership which is at the state level. I also don't see how the bankruptcy court can force the sale of individual deeded interval rights when those owners aren't the ones declaring bankruptcy. Owning deeded timeshare interests is not like owning shares in a company. Did you even look at the link to the AI explanation that I included? Here is a snippet;

Timeshare-specific wrinkle​

• Some troubled timeshare HOAs have tried combining bankruptcy + termination motions, arguing that liquidation is in creditors’ best interest.
• Courts have generally said: “Not without following state termination statutes.”
• In other words, bankruptcy doesn’t short-circuit the owner-consent requirements built into state law.

The HOA votes to terminate usually satisfy state law, if done properly. That's why hiring a competent law firm is essential. After that bankruptcy allows short circuiting of having to deal with each owner individually. It makes them a class of creditor.

 

[dioxide45]

The HOA votes to terminate usually satisfy state law, if done properly. That's why hiring a competent law firm is essential. After that bankruptcy allows short circuiting of having to deal with each owner individually. It makes them a class of creditor.

Right now, none of the votes to terminate have been done. None of the votes I've seen indicate a plan to terminate the timeshare regime. According to everything I've seen, they still have to follow state mandated requirements to collapse the condo/timeshare regime. Until that's done, they can't sell the properties free and clear. That may not require dealing with each owner individually, but would still require them to follow the condo declaration requirements which may require some sort of supermajority vote. I suspect this is why Wyndham is offering the CWA swap. In addition to the FairShare trust replacement requirement, it will allow them to take control of more deeds. With maintenance fees suspended starting in 2026, there would no cost of Wyndham or the HOA taking on the ownership other than deed recording fees and labor which they bill back to the HOA anyway. It might be enough to get them the votes needed to control the super majority vote.

If we look at the case of Westgate and the condo in Orlando that they damaged but left in place when they were expanding Westgate Lakes. There is certainly a reason they didn't demolish a condo they didn't have fully own. The situation may be different as the HOA there didn't file Chapter 11, but Chapter 11 of the HOA can't wipe out an owners deeded real property ownership. Perhaps it can force the sale of other common elements and other assets owned by the HOA to pay creditors. Though I think even common elements may not be able to be sold free and clear as timeshare deeds may convey a small percentage of common elements to the deeded owner.

@Floridaman76 raised the same question back in early September and I questioned it then along with some other people guessing as to what could or couldn't be done through the Chapter 11 plan. We are here still almost a month later wondering the same thing, thinking that these bankruptcy proceedings are the end game to sell the real estate. Perhaps it is just the begining.

 

[comicbookman]

I

Right now, none of the votes to terminate have been done. None of the votes I've seen indicate a plan to terminate the timeshare regime. According to everything I've seen, they still have to follow state mandated requirements to collapse the condo/timeshare regime. Until that's done, they can't sell the properties free and clear. That may not require dealing with each owner individually, but would still require them to follow the condo declaration requirements which may require some sort of supermajority vote. I suspect this is why Wyndham is offering the CWA swap. In addition to the FairShare trust replacement requirement, it will allow them to take control of more deeds. With maintenance fees suspended starting in 2026, there would no cost of Wyndham or the HOA taking on the ownership other than deed recording fees and labor which they bill back to the HOA anyway. It might be enough to get them the votes needed to control the super majority vote.

If we look at the case of Westgate and the condo in Orlando that they damaged but left in place when they were expanding Westgate Lakes. There is certainly a reason they didn't demolish a condo they didn't have fully own. The situation may be different as the HOA there didn't file Chapter 11, but Chapter 11 of the HOA can't wipe out an owners deeded real property ownership. Perhaps it can force the sale of other common elements and other assets owned by the HOA to pay creditors. Though I think even common elements may not be able to be sold free and clear as timeshare deeds may convey a small percentage of common elements to the deeded owner.

@Floridaman76 raised the same question back in early September and I questioned it then along with some other people guessing as to what could or couldn't be done through the Chapter 11 plan. We are here still almost a month later wondering the same thing, thinking that these bankruptcy proceedings are the end game to sell the real estate. Perhaps it is just the begining.

I believe we will see termination votes coming. Till then you are absolutely correct. Your take on the reason for the swap is interesting, although I believe that the prospect of getting individual owners to pay the CWA maintenance fees instead of Wyndham is probably a large motivator. I suspect Wyndham has much more CWA inventory than they would like.

 

[jp10558]

But those are covered under federal law, not necessarily deeded ownership which is at the state level. I also don't see how the bankruptcy court can force the sale of individual deeded interval rights when those owners aren't the ones declaring bankruptcy. Owning deeded timeshare interests is not like owning shares in a company. Did you even look at the link to the AI explanation that I included? Here is a snippet;

Timeshare-specific wrinkle​

• Some troubled timeshare HOAs have tried combining bankruptcy + termination motions, arguing that liquidation is in creditors’ best interest.
• Courts have generally said: “Not without following state termination statutes.”
• In other words, bankruptcy doesn’t short-circuit the owner-consent requirements built into state law.

Note that might (if it's like qwen) referencing nolo which was related specifically to an individual owner doing bankruptcy, so the AI picked the wrong info. When reiterating it about the HOA it says you can get paid out from the sale because of the deed but not that you would be needing additional votes in that case.

 

[bnoble]

does anyone here really know how they plan to terminate the condominium/timeshare scheme under bankruptcy? How can chapter 11 bankruptcy eliminate the individual interval deeded ownerships of each owner?

I'm going to guess that the law firm advising Wyndham believes (strongly) that a federal court can force the deedholders to sell, whether willingly or not. After all, the deedholders are not just losing the property; they are being compensated according to their share of ownership, by receiving a pro rata share of the net liquidation proceeds.

That law firm could be wrong, but I am not going to bet on it, nor am I going to spend any time, energy, or money trying to see if they are. If someone else wants to, it's their nickel.

In other words: It seems very unlikely that no one thought to ask this question as they were developing the mechanism they have settled on.

 

[dioxide45]

I'm going to guess that the law firm advising Wyndham believes (strongly) that a federal court can force the deedholders to sell, whether willingly or not. After all, the deedholders are not just losing the property; they are being compensated according to their share of ownership, by receiving a pro rata share of the net liquidation proceeds.

That law firm could be wrong, but I am not going to bet on it, nor am I going to spend any time, energy, or money trying to see if they are. If someone else wants to, it's their nickel.

In other words: It seems very unlikely that no one thought to ask this question as they were developing the mechanism they have settled on.

I am just wondering if the Chapter 11 filing isn't a means for some other ends. Do we even know that the guidance of the law firm is that the chapter 11 is the sole method to be used to actually sell the underlying real estate? Have any of the communications to owners actually specified that? It does't seem like this method has been attempted yet and there is a small cottage industry set up around helping timeshares collapse the timeshare/condominium scheme. No one has tried this method before. There must be a reason.

Chapter 11 is just to reorganize (as other's here have put it). A sale would seem to indicate liquidation and they should be Chapter 7.

 

[chapjim]

I am just wondering if the Chapter 11 filing isn't a means for some other ends. Do we even know that the guidance of the law firm is that the chapter 11 is the sole method to be used to actually sell the underlying real estate? Have any of the communications to owners actually specified that? It does't seem like this method has been attempted yet and there is a small cottage industry set up around helping timeshares collapse the timeshare/condominium scheme. No one has tried this method before. There must be a reason.

No one ever suggested that Chapter 11 is the sole method of doing anything. We do not know specifics of what K&L Gates is advising Wyndham and the various HOAs. We will not know due to attorney-client privilege.

For real, no one has ever tried Chapter 11 to facilitate a sale? Source, please (and not AI).

Chapter 11 is just to reorganize (as other's here have put it). A sale would seem to indicate liquidation and they should be Chapter 7.

That would mean K&L Gates' attorneys don't know what they are doing, which I sincerely doubt is the case.

 

[dioxide45]

For real, no one has ever tried Chapter 11 to facilitate a sale? Source, please (and not AI).

Perhaps it would be better for you to find a source where it indicates someone has used Chapter 11 to facilitate the sale of a timeshare property. Finding one that has happened should be easier than proving that none has ever happened. I haven't found one yet. Perhaps you know of some?

Also, no one has yet to explain how they plan to circumvent state mandated requirements under real estate law to collapse the timeshare/condo regime to achieve a free and clear sale.

 

[bnoble]

Again, I'm pretty sure you're not the first to ask that question of this process, and if you're not, then K&L has what they believe is an answer. Their answer might be wrong, but good luck to anyone who wants to push that rock.

 

[dioxide45]

Again, I'm pretty sure you're not the first to ask that question of this process, and if you're not, then K&L has what they believe is an answer. Their answer might be wrong, but good luck to anyone who wants to push that rock.

I am not necessarily concerned if it is right or wrong, but just rather what the answer actually is.

 

[bnoble]

We will all find out in due course. I will have personal experience with how the process unfolds in Hawaii, once they start acting on the recently concluded vote.

 

[chapjim]

Perhaps it would be better for you to find a source where it indicates someone has used Chapter 11 to facilitate the sale of a timeshare property. Finding one that has happened should be easier than proving that none has ever happened. I haven't found one yet. Perhaps you know of some?

Also, no one has yet to explain how they plan to circumvent state mandated requirements under real estate law to collapse the timeshare/condo regime to achieve a free and clear sale.

You are the one who made a categorical statement. I thought you might have a source. I was wrong.

 

[dioxide45]

You are the one who made a categorical statement. I thought you might have a source. I was wrong.

There is no source, because there is no source indicating that a timeshare property has used chapter 11 to collapse the timeshare regime and sell itself. The absence of that might actually indicate it hasn't happened. Proving something didn't happen is much harder than proving something did. I can't prove a unicorn didn't run through the woods last night unless there is video proof that it did.

Until we have evidence that a property was successful in such an endeavor, we would have to believe it hasn't happened. I don't see anyone, including you, jumping in with indisputable evidence that is has happened. Just more guessing.

BTW, you seem to laugh off AI, but it does have access to far more information than you and I do at such speeds.