Case:12-24882-ABC Doc#:544 Filed:10/22/12

Entered:10/22/12 16:16:15 Page1 of 4

UNITED STATES BANKRUPTCY COURT DISTRICT OF COLORADO

In re CORDILLERA GOLF CLUB, LLC dba The Club at Cordillera, Tax ID / EIN: 27-0331317 Debtor.

Case No. 12-24882 ABC Chapter 11

DEBTORS RESPONSE TO MOTION FOR RELIEF FROM THE AUTOMATIC STAY, TO THE EXTENT APPLICABLE, TO ALLOW PAYMENT AND ADVANCEMENT OF PROCEEDS UNDER INSURANCE POLICY

Cordillera Golf Club, LLC dba The Club at Cordillera (Debtor) by and through their undersigned counsel, hereby responds to Cordillera Golf Holdings, LLC, WFP Cordillera, LLC, GCH Manager, LLC, David A. Wilhelm and Patrick Wilhelms (the Movants) Motion for Relief from the Automatic Stay, to the Extent Applicable, to Allow Payment and Advancement of Proceeds Under Insurance Policy (Motion) as follows: Debtor does not have any objection to the relief sought provided that the clarifications, set forth below, as previously discussed with Movants, are included in any order approving the relief. Specifically, the Motion provides for relief to the extent the stay affects the insurance policy owned by a non debtor entity, WFP Cordillera, LLC, but which covers the Debtor as an additional insured. The Debtor has had the benefit of coverage under the policy for its defense costs in connection with the class action styled Cheryl M. Foley, et al. v. Cordillera Golf Club, LLC, et al. pending in the District Court for Eagle County, Colorado, Case No. 11CV552 (Class Action). The Motion seeks relief to allow the carrier to pay defense cost from policy proceeds, however, the draft order submitted by Movants limits the relief as to the Class Action Defendants but, Debtor is not included in this defined term. Debtor understands that the

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Movants will amend the order to make certain that the relief includes relief as to pay defense costs of all professionals of the insureds, including the Debtor and with this clarification to the proposed order, it is acceptable to the Debtor. The Debtor also has reviewed the objection filed on October 11, 2012 [Docket No. 527] by Cheryl M. Foley, Thomas and Jane Wilner, Charles and Mary Jackson, and Kevin B. Allen, as representatives of a certified class in the Class Action (collectively, the Member Representatives). The Debtor has the following comments. First, the Member Representatives argue that the Court cannot grant the relief because either it requires relief to use property that is not property of the estate or it seeks declaratory relief and thus requires an adversary proceeding that the policy is not property of the estate1. Notwithstanding these issues, this Court can grant relief without rendering an opinion as to whether the policy and/or proceeds are or are not property of the estate, by simply concluding that to the extent the policy is property of the estate, relief is warranted and to the extent it is not, no relief is necessary--thus giving the insurance company the comfort it requires to disperse funds to pay defense costs of all its insureds without the risk of being accused of violating the automatic stay. Second, the Movants argue that the relief is unclear, particularly with regard to the scope and extent of the relief sought and the scope of Gordon & Rees and Foley & Lardners representation of defendants in the Class Action. Both Gordon & Rees and Foley & Lardner have and will continue to represent the Debtor in the Class Action. In addition, Gordon & Rees will represent the Class Action Defendants as insurance defense counsel. The Debtor has confirmed with Gordon & Rees that the Motion seeks relief, to the extent the stay applies at all, to allow the insurance carrier to process and pay all defense costs of its insureds including the fees incurred by both Gordon & Rees and Foley & Lardner. Again, this is a policy owned by a
1

As noted above, the policy is not owned by the Debtor, the Debtor is simply an additional insured and thus, the issue is whether the proceeds are potentially property of the estate, not the policy.

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non-debtor entity for which the Debtor is an additional insured. Thus, providing the insurance company with comfort that it may proceed to perform its obligations to pay defense costs is appropriate and the relief seeks the ability to satisfy all defense costs, not just those of the Debtor. The Member Representatives also properly point out that the settlement that is currently the subject of a motion for approval set for hearing on October 23, 2012, will allow for relief from stay to allow the Class Action to proceed consistent with the terms of the settlement. The relief from stay that is contemplated by the settlement agreement would allow the insurance company to participate in a settlement that would allow it to pay any settlement that might be approved in the Class Action case in the future. Thus, this is a non issue as it will be resolved by the approval of the pending 9019 motion set for hearing on October 23, 2012. Based upon the foregoing, the Debtor has no objection to the Court granting the relief with the clarification that the relief is broad enough to allow the insurance carrier to pay all defense costs consistent with the terms of the policy without fear that it is in some way violating the bankruptcy stay in this case.

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Date: October 22, 2012

Respectfully submitted, FOLEY & LARDNER LLP By: /s/ Christopher Celentino Christopher Celentino (CA No. 131688) Mikel Bistrow (CA No. 102978) Dawn A. Messick (CA No. 236941) Admitted Pro Hac Vice 402 West Broadway, Suite 2100 San Diego, California 92101 Telephone: 619-234-6655 Facsimile: 619-234-3510 Email: ccelentino@foley.com Email: mbistrow@foley.com Email: dmessick@foley.com -andSENDER & WASSERMAN, P.C. Harvey Sender, #7546 1660 Lincoln Street, Suite 2200 Denver, CO 80264 Telephone: 303-296-1999 Facsimile: 303-296-7600 Email: sender@sendwass.com Attorneys for Debtor and Debtor-in-Possession

ZRCDO/1078215/13888895v.1

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