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

[dioxide45]

The CWA people won't get the cash out, but depending on the swap timing they should get the 2026 maint. fee refund or at least a credit applied to their new CWA points. It will be interesting to see if Wyndham makes the deadline to accept the swap be prior to the refund. Hitchhiker, could you ask your contacts during your next talk how this would be handled? Especially since I believe CWA does not pay a year ahead. The refund should go to the original owner who actually paid it, not to Wyndham after a trade.

Do we know the timing yet of the bankruptcy filings? Could that impact any of this? I would think they would want to complete any refunds of prepaid 2026 fees prior to filing in federal bankruptcy court? I doubt we will see any refunds to CWA swaps unless they prepaid 2026 fees. Can they do the CWA swaps once they file the bankruptcy in federal court? Once filed, just about anything monetary would need approval by the court. I would think that would apply to CWA swaps too?

 

[HitchHiker71]

I may have missed some posts or a basic legal concept concerning this Wyndham resort closing mess. Chapter 11 is reorganization bankrupcy which gives the resort the ability to restructure debt so that it can remain open and Chapter 7 is for the purpose of termination, i.e. closing the resort. If Chapter 7 was used then all non-exempt assets could be used to wind down as per a court appointed trustee. Please let me know what I am not understanding.

My understanding is that eligibility for commercial chapter 7 is means tested. The decision typically hinges on the business’s inability to continue operations due to overwhelming debt or lack of viable prospects.

This is not the case for these resorts, even the proxies often state that the HOAs are actually in good financial shape. Hence the use of chapter 11.

 

[HitchHiker71]

The refurb blitz is a little questionable, but perhaps it makes the properties more valuable if the eventual result is a sale. But wouldn't whoever buys the property have to do the other capital improvements that Wyndham is saying is the reason they need to close these properties? So I suspect those needed capital improvements will bring the value back down. Using the reserves mostly impacts the CWA swap folks since they won't be getting a cash out.

Wyndham has not categorically said that capital improvements are required at every resort, so therefore we should not be applying blanket assumptions like this. Wyndham has actually stated that this is a complex set of processes and that the reasons are unique to each resort and are covered, to some extent, in the specific HOA statements and proxies. There are no binary answers on the why that apply across all impacted resorts.

 

[dioxide45]

Wyndham has not categorically said that capital improvements are required at every resort, so therefore we should not be applying blanket assumptions like this. Wyndham has actually stated that this is a complex set of processes and that the reasons are unique to each resort and are covered, to some extent, in the specific HOA statements and proxies. There are no binary answers on the why that apply across all impacted resorts.

Perhaps, but some of the proxy information here has clearly indicated capital improvements. Just one on this page is about $5 million. Another one was $10 million. They even seemed to call out this, along with avoiding special assessments, in their 7/15 statement. Thus is must some kind of contributing factor for some number of the properties? Every property? Probably not, but I didn't say every property.

 

[dioxide45]

I encourage BB owners to vote by proxy using Alan Baker as your proxy and vote no. Disgusting how Wyndham is going to amend the bylaws to have it their way.

I wonder if this one could be considered questionable. Deleting by-laws where the provision requires 100% unanimous consent by a vote that doesn't require unanimous consent could probably be challenged. Will anyone really try and challenge it? Maybe not.

 

[comicbookman]

I wonder if this one could be considered questionable. Deleting by-laws where the provision requires 100% unanimous consent by a vote that doesn't require unanimous consent could probably be challenged. Will anyone really try and challenge it? Maybe not.

Depends on what he vote threshold is for changing the bylaws. That should be clearly stated in the bylaws themselves.

 

[Arimaas]

"covered, to some extent" is... doing a lot of heavy lifting. I think the HOA statements we've seen reported here basically say it's because of capital improvements that are needed.

That's because their legal counsel advised against saying "because we want to"

 

[dioxide45]

Depends on what he vote threshold is for changing the bylaws. That should be clearly stated in the bylaws themselves.

But courts have stated that you can’t use a 51% rule to override a specific 100% rule. It would destroy the intent of the more protective rule. This was specifically the case and ruling with Biscayne 21.

 

[jp10558]

Yes, I'm the one who said it was templated in the first place LOL. K&L Gates is managing the entire process for all resorts involved. That's not new info. I'm simply reinforcing that while the process is templated, the outcomes as determined by the bankruptcy courts, may very well not be the same, especially when we look at the details that play out for each resort. Only time will tell. Even the details for the votes are in some cases a bit different, as we're seeing in the case of BB. I'd assume the second vote, assuming the first vote succeeds, will be the same template as what we've seen with the other resorts - using Chapter 11 bankruptcy to fast track resort sale.

Yea, it seems like - if anyone wanted to challenge any of these - the circuit whatever court is in would determine if you can even do Chapter 11 while claiming no financial strain at all.

 

[HitchHiker71]

I wonder if this one could be considered questionable. Deleting by-laws where the provision requires 100% unanimous consent by a vote that doesn't require unanimous consent could probably be challenged. Will anyone really try and challenge it? Maybe not.

That would require a vote to change the provision and deprovision of bylaws. The nature of the bylaw in scope doesn't really matter in this case.

 

[HitchHiker71]

But courts have stated that you can’t use a 51% rule to override a specific 100% rule. It would destroy the intent of the more protective rule. This was specifically the case and ruling with Biscayne 21.

Which court(s) exactly? State courts in MA? Because that's where this resort is located. The third district court rulings in the state of Florida may or may not have any bearing on this resort location. That ruling therefore may or may not impact other state rulings. District court rulings in one state can impact other states through the application of the Full Faith and Credit Clause of the Constitution, but only under certain circumstances, and that means someone would need to file suit and challenge the current process of course. Good luck going up against K&L Gates in that instance.

 

[HitchHiker71]

Yea, it seems like - if anyone wanted to challenge any of these - the circuit whatever court is in would determine if you can even do Chapter 11 while claiming no financial strain at all.

IMHO that would be determined by the bankruptcy courts - not circuit courts. That is, after all, one of the primary rulings within bankruptcy courts - eligibility for the claims.

 

[dioxide45]

That would require a vote to change the provision and deprovision of bylaws. The nature of the bylaw in scope doesn't really matter in this case.

I am not sure what you mean. They want to strike from the bylaws the requirement that a 100% vote is required to file for bankruptcy or seek ceasing operations. That is most certainly in scope. They want to remove that provision from the by-laws so they can then use a lower threshold to vote to file chapter 11.

 

[dioxide45]

Which court(s) exactly? State courts in MA? Because that's where this resort is located.

Biscayne 21 was in Florida, but it general principle remains the same.

 

[Fido Chuckwagon]

Which court(s) exactly? State courts in MA? Because that's where this resort is located. The third district court rulings in the state of Florida has no bearing on this resort location.

Biscayne 21 was a Florida state appellate court decision. With that said, the logic of it was such that I expect most state courts would come out the same way (allowing a provision that requires 100 percent support to be changed by a 51 percent vote runs contrary to common sense). Whether anyone would bother suing is another matter.

 

[comicbookman]

But courts have stated that you can’t use a 51% rule to override a specific 100% rule. It would destroy the intent of the more protective rule. This was specifically the case and ruling with Biscayne 21.

That depends on what it says in the by-laws about changing by-laws. if the 51% specifically says it is all that is required to change ANY and all existing by-laws, then the intent is clear and it works.

 

[comicbookman]

Yea, it seems like - if anyone wanted to challenge any of these - the circuit whatever court is in would determine if you can even do Chapter 11 while claiming no financial strain at all.

Claiming chapter 11 while claiming no financial strain happens all the time. They are claiming that the financial stain is coming up and that the best way to preserve the assets and pay off debts is to file now. Chapter 11 allows for restructuring of debts and payments.

 

[dioxide45]

That depends on what it says in the by-laws about changing by-laws. if the 51% specifically says it is all that is required to change ANY and all existing by-laws, then the intent is clear and it works.

Based on Biscayne 21, it would seem the appellate court in Florida would have disagreed. It runs contrary to the purpose of the 100% provision. Why have a 100% provision in the by-law if that by-law can simply be changed by a 51% vote? Just make the by-law provision 51%.

 

[comicbookman]

Biscane is why I said it depends on what the amendment clause specifically says. to quote the bylaw in Biscane "[P]roposals, adoptions and approvals [of amendments] must be by not less than fifty-one (51%) percent of the members of the Association, except as to an amendment altering the percentages of ownership in the Common Elements or the voting rights of any of the Owners of the Condominium, any of which shall require the approval of one hundred (100%) percent of the Owners." so it was specifically prohibited by the bylaws. You probably should read the judgements you site before you rely on them to make a point. The developer in Biscane tried to change this clause and then the 100% rule. Clearly against the intent of the By-laws. If the BB by-law allows a 51% vote to change ANY by-law, without exception, then that is what they can do. Why you would set it up this way is beyond me, but we have all seen dumber provisions in HOA by-laws.

 

[HitchHiker71]

That is useless. Wyndham already controls enough interests to control the outcome of the vote. Individual owners voting is really because of the legal requirements. It isn't necessary, they just need to go through the motions.

If you want to challenge it, then it is time to lawyer up and talk to a real estate attorney in the state where the property is located. Wyndham would prefer to go the current route because going the other route would cost them a lot more as they would have to buy out the ownership interests of every owner. Don't let Wyndham use the power of the courts (and thus the government) to trample on your deeded ownership rights.

That's really easy to say - this is akin to spending other people's money. If you have such a problem with it, why don't you do it yourself?

 

[dioxide45]

That's really easy to say - this is akin to spending other people's money. If you have such a problem with it, why don't you do it yourself?

I don't have any skin in the game. I'm not spending anyone else's money. They are free to do whatever they want. We should also remember, some owners are also attorneys and may be able to represent themselves.

 

[HitchHiker71]

Biscane is why I said it depends on what the amendment clause specifically says. to quote the bylaw in Biscane "[P]roposals, adoptions and approvals [of amendments] must be by not less than fifty-one (51%) percent of the members of the Association, except as to an amendment altering the percentages of ownership in the Common Elements or the voting rights of any of the Owners of the Condominium, any of which shall require the approval of one hundred (100%) percent of the Owners." so it was specifically prohibited by the bylaws. You probably should read the judgements you site before you rely on them to make a point. The developer in Biscane tried to change this clause and then the 100% rule. Clearly against the intent of the By-laws. If the BB by-law allows a 51% vote to change ANY by-law, without exception, then that is what they can do. Why you would set it up this way is beyond me, but we have all seen dumber provisions in HOA by-laws.

In the immortal words of Jack Reacher: Details matter

 

[shawnee83]

I'm no attorney; furthermore, Perry Mason never handled bankruptcy cases so there goes my other source of legal knowledge.

Anyway, I was curious about the point raised by many about declaring bankruptcy while still solvent. Apparently this is a common occurrence (as others have noted) and Chapter 11 offers the advantage of restructuring before a business hits rock bottom. Here's just one web site I found helpful: https://www.dailydac.com/solvent-debtor-a-chapter-11-debtor-doesnt-need-to-be-broke/

But this leads back to the question of the ultimate goal of this whole kabuki dance. They say they want to sell, but it seems like Chapter 11 is meant to "reorganize."

Again, not a lawyer/attorney/counselor/barrister/solicitor/shyster so I am looking for some bulletin board legal opinions.

 

[dioxide45]

I'm no attorney; furthermore, Perry Mason never handled bankruptcy cases so there goes my other source of legal knowledge.

Anyway, I was curious about the point raised by many about declaring bankruptcy while still solvent. Apparently this is a common occurrence (as others have noted) and Chapter 11 offers the advantage of restructuring before a business hits rock bottom. Here's just one web site I found helpful: https://www.dailydac.com/solvent-debtor-a-chapter-11-debtor-doesnt-need-to-be-broke/

But this leads back to the question of the ultimate goal of this whole kabuki dance. They say they want to sell, but it seems like Chapter 11 is meant to "reorganize."

Again, not a lawyer/attorney/counselor/barrister/solicitor/shyster so I am looking for some bulletin board legal opinions.

That has been something touched on in this thread. Many defend the HOA saying that the are in good financial standing and are using Chapter 11 to "reorganize". Yet the ultimate goal seems to be liquidation. So what is it? Reorganization or liquidation? It looks like it is liquidation.

 

[rickandcindy23]

I don't know how they are going to talk people into deeding back weeks. 50+ owners for each unit X quite a few units. It's going to be a nightmare for Wyndham, especially their inept title department. This could take years to unravel, and then the HOA will no longer be solvent.