Consolidated Resorts files for Chapter 7 bankruptcy

Consolidated Resorts Inc. and 13 affiliated companies filed for Chapter 7 bankruptcy this week, seeking to liquidate the time-share companies.

Consolidated has between $100 million to $500 million in liabilities and $1 million to $10 million in assets, according to a bankruptcy document signed by Consolidated President Arthur Spector. It's not believed that those numbers can be added to the range of numbers reported for the other companies.

A locally based subsidiary of ASNY Corp., Consolidated operated 14 resorts in Las Vegas, Hawaii and Orlando, Fla. ASNY did not file for bankruptcy.

The local resorts include Club de Soleil, Tahiti and Tahiti Village.

Company spokesman Ken Chupinsky said the bankruptcy filings on Tuesday and Wednesday do not affect the time-share resorts and the time-share associations that run the resorts.

"Their operations are independent and unimpaired (by the bankruptcy filings)," said Chupinsky.

Asked for further comment, he pointed to a previous statement made for a June 24 Review-Journal story disclosing that Consolidated planned to file for bankruptcy protection.

In a statement, Chupinsky then said the bankruptcy would result from "dramatic changes in the economy and the shrinking time-share lending environment." He added: "The scarcity of lenders in the time-share industry has made it impossible to continue the company."

The number of employees has not been disclosed. Consolidated has offices at 801 S. Rampart Blvd., Suite 200.

When the companies previously disclosed that they planned to file for bankruptcy protection, they said they were planning to file under Chapter 11, which gives them an opportunity to reorganize their debts and emerge from bankruptcy as an ongoing businesses.

Chapter 7 provides for liquidation of assets so that cash may be distributed among creditors.

Analysts speaking anonymously said the credit crunch has made it difficult for timeshare companies to obtain third-party financing for timeshare resorts. In addition, analysts said time-share resort developers have been slammed as cash-strapped consumers stop paying on time-share loans and use their money for their home and car payments. However, time share resorts can rent units of delinquent time-share owners to other travelers, creating another source of revenue.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.