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Mammoth Lakes, California Files Chapter 9 Bankruptcy

Posted By admin || 4-Jul-2012

Mammoth Lakes, California Files Chapter 9 Bankruptcy

Mammoth Lakes, California, a popular skiing town files bankruptcy protection ahead of a multi-million dollar judgment brought against them by a developer.  Town officials were trying to negotiate payment plan details ahead of a court-mandated deadline but were unsuccessful.  With the bankruptcy filing, the town may seek approval for a 10-year payment plan that would allow the town to remain operating.  Mammoth Lake is a small town area with roughly 8,000 residents.

Previous reports claim Mammoth Lakes was already facing financial difficulties.  Employees took pay cuts and the ski area and several dozen ski area employees were laid off in the spring. June Mountain, which is a sister resort, recently announced it will close due to the economy.  Yet, Mammoth Lakes has also been in legal turmoil since 2006 regarding property development.   In 1997, an agreement was established between Mammoth Lake Land Acquisition and Mammoth Lake that included making improvements to the airport in exchange for earning rights to develop additional property.  This included a hotel project worth $400 million.

The court felt Mammoth Lakes didn't follow through with the agreement after learning certain details of the hotel project may interfere with FAA regulations, hindering expansion efforts of the airport.  Airline service has been a big factor for the town as it has expanded services over the last 10 years.

The bankruptcy filing coincides with the failed agreement; Mammoth Lakes is facing a breach-of-contract judgment for $43 million.  The town hopes the filing will allow them to make payments of $500,000 a year over the next 10 years.

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