Former Owners of Split Rock and Mountain Laurel Resorts Seek $60 Million in Damages from Textron Financial Corporation (“Textron”)
Vacation Charters Ltd. (“VCL”), a Pennsylvania Corporation which had maintained ownership and development control of Split Rock Resort, Lake Harmony, PA and Mountain Laurel Resort & Spa, White Haven, PA for a number of years, filed suit against Textron Financial Corporation of Wilmington, DE in October of 2014 with the United States District Court, Middle District of Pennsylvania Case No.:3:11-cv-02083. Textron is a wholly owned finance business of Textron, Inc., a multi-industry company with revenues of $13.8 billion in 2014, of which $3.8 billion were sales to the U.S. government.
Split Rock Lodge has been a Pocono icon since the 1940’s; purchased by the Kalins family in 1981. The summary of over 33 years of additional development to the property has created one of the finest, amenity filled, mega resorts projects in the Poconos. Also in the suit is Mountain Laurel Resort, purchased in 1999 and developed primarily as a timeshare spa facility. The company has utilized these properties to develop some of the most successful timeshare projects in the Northeast with over 20,000 timeshare members.
VCL and Textron enjoyed a mutually beneficial relationship for some time, related to a $50 million Credit Facility to fund receivables. The company (VCL) has borrowed in excess of $135 million under their notes receivable financing and construction loan agreements and had timely repaid $100 million before Textron’s extraordinary intervention in daily business operations and loan rates.
In March 2009, Textron advised VCL that they would not be extending either the Notes Receivables Loan or the Construction Loan after June of 2009 as the Board of Directors of Textron, Inc. decided to shut down their Finance Company, with full knowledge that other financing options, at this time, would be quite limited, if at all available to VCL. This caused an immediate and very drastic interruption of the company’s primary business. Also in June of 2009, Textron took additional actions that had the effect of dramatically reducing cash flow for the resort.
Claims in the lawsuit include (a) Textron enriched itself at the expense of VCL and the timeshare purchasers (b) Textron forced VCL to hire a restructuring officer to the detriment of VCL and the timeshare owners and (c) Textron made false promises to VCL to acquiesce to the appointment of a Receiver and later, the sale of the resorts. These actions taken by Textron and related legal costs removed $7 million out of operating revenue for the resort in the years 2009-2011. This operating shortfall, caused by Textron, led to the first loan default to Textron in 2011.
These deliberate actions taken by Textron eventually led to them having a Receiver appointed to operate the company in November 2011 and the marketing and sale of the resorts by the Receiver, which took place on August 8, 2014.
For W. Jack Kalins, his family and dedicated long-term employees, a life’s work and millions of dollars in investment has been taken away by the actions of Textron Financial Corporation as per the complaint.
- Contact Information
- Mark Van Sise
- Vacaction Charters Ltd.
- (1) 570-269-3867
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