Sunterra Corp. seeks bankruptcy protection

Fla. resort company files case in Baltimore

Travel industry

June 02, 2000|By Gail Gibson | Gail Gibson,SUN STAFF

Sunterra Corp., an international resort company with ties to Maryland, has filed for bankruptcy protection in U.S. District Court in Baltimore, saying it owes potentially thousands of creditors hundreds of millions of dollars.

The petition for Chapter 11 bankruptcy follows months of financial trouble for the Orlando, Fla.-based time-share company, which operates 90 resorts around the world and serves about 300,000 families.

The company reported a $15.6 million net loss in the first quarter of 2000. Ten days ago, it announced that it would lay off 930 workers and halt sales at its less-profitable resort sites, including spots in Miami and Fort Lauderdale, Fla., and Hilton Head, S.C., according to company reports and court papers.

In filings with the federal Securities and Exchange Commission at the end of 1999, the company reported debts of more than $827 million. Its revenue for the year was $507 million and the company's assets total $1.058 billion.

Court papers describe Sunterra as a Maryland corporation, with a business address of 300 E. Lombard St. in Baltimore. But the company does not list a Baltimore phone number, and its executive offices are in Florida.

Baltimore attorney Paul M. Nussbaum, who filed the bankruptcy petition Tuesday, and company officials in Florida did not return phone calls.

In a news release, company President T. Lincoln Morisonsaid the company will continue operating while it restructures its finances. He said Sunterra planned to emerge as a "stable organization that is competitive in our markets and that consistently delivers quality service to our vacation interest owners."

To keep its doors open, Sunterra said it has secured an interim $25 million credit line from Ableco Finance LLC that could be extended to $53 million.

Along with Sunterra, 36 of the company's affiliates also filed for Chapter 11 bankruptcy protection. That list did not include two leading subsidiaries, Sunterra Europe and Sunterra Pacific.

The company said in court papers that the case would involve liabilities of more than $100 million and thousands of creditors. It identified the top 30 creditors, and Norwest Bank of Minnesota topped the list with a claim for $209.7 million. Other creditors included companies such as Sprint, owed $372,637; NASCAR, owed $300,000, and Walt Disney World, with a claim of $223,680.

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