Federal Judge Approves Sale of Burke to Group That Includes Berkshire East, Catamount Owner

Auction would have been “very risky” according to court-appointed receiver Michael Goldberg

The U.S. District Court in Miami yesterday approved court-appointed receiver Michael Goldberg’s request to bypass an auction process in the sale of Burke Mountain, Vermont. The decision clears the way for a group that includes the Schaefer family, longtime operators of Berkshire East and Catamount ski areas in Massachusetts, to close on their $11.5 million offer for the mountain.

Burke has idled in receivership since 2016, when an EB-5 scandal orchestrated by the same genius who renamed the ski area “Q-Burke” in his own honor collapsed. Goldberg sold Burke sister resort Jay Peak in a three-party 2022 auction anchored to a $58 million opening bid by Pacific Group Resorts (PGRI). Utah-based PGRI, which operates five other North American ski areas, outbid the other two parties, which have never been disclosed to the public, paying $76 million for Jay.

But Jay Peak is the snowiest ski area in the eastern United States and home to some of the most extensive gladed terrain on the continent, an apex New England resort standing alongside Vail’s Stowe, Alterra’s Sugarbush, and Boyne’s Sugarloaf. And it still took six years to sell (Covid smashing our collective faces in for a year and a half didn’t speed things up any). Burke is a good ski area with high-speed lifts, a 2,000-foot vertical drop, and a grand legacy stapled to the race academy of the same name, but it has long suffered from an odd, far-north location outside of mainline New England ski clusters and inconsistent snowmaking. The mountain is little-known outside of hardcore ski circles, a shortcoming that may have contributed to Goldberg’s struggle to court potential buyers.

By the time the current group, which calls itself “Bear Den” and also includes Burke Mountain Academy and the local Graham family, materialized with their bid, Goldberg appears to have had enough. Sensing a lack of serious counterparties who would drive up the sales price as Jay Peak’s auction had, the receiver last week asked the court to bypass an auction for Burke. I alluded to this request in my last Burke write-up, but Goldberg’s filing is worth quoting at length here:

IV. Receiver Requests the Court Waive An Auction Process

24. Typically, the Receiver would contemplate an auction sale process in order to assure the highest and best offer for the Resort. However, the Resort has been on the market for many months and, although several parties have expressed interest, no party has been willing to make a binding offer and enter into a sale agreement until this Buyer which is at the highest offer price the Receiver has received to date. Further, for the reasons set forth below, the Receiver submits that an auction process would be very risky and not in the best interest of the receivership estate and the investors.

25. First, Bear Den Partners has conditioned its offer and the Purchase Agreement on a sale without an auction process as it has spent hundreds of thousands of dollars engaging in due diligence and negotiating the Purchase Agreement. Importantly, its offer is contingent on no auction because Bear Den Partners needs to close this transaction quickly and start making capital improvements to the property in order to complete them before next ski season. Accordingly, Bear Den Partners will withdraw its offer in the event the Court requires an auction and the receivership estate risks losing what the Receiver truly believes to be a great offer.

26. Second, Burke Mountain Academy ("BMA") has a right of first refusal on the sale of the Resort. … Thus, even if the Receiver were to conduct an auction, he would have to offer BMA the right to acquire the Resort at the same price as the winning bid. This alone would "chill" the auction process because other potential bidders can spend hundreds of thousands of dollars in conducting due diligence merely to have the Resort bought out from under them. However, BMA has agreed to waive its right of first refusal solely with respect to Bear Den Partner's offer thereby allowing the sale to Bear Den Partners to go through without any issue.

27. Third, there is a covenant made by Burke Mountain Recreation, Inc. …

28. The Covenant pertains to the Common Recreation Area and allegedly restricts the right to transfer any such interest therein to a for profit entity. Although the Receiver does not believe the Covenant prevents him from selling the Resort, Bear Den Partners has obtained a waiver of this Covenant thereby negating any potential fight with respect thereto.

29. Finally, the Resort property sits upon a ground lease with the State of Vermont. … Any contract to purchase the Resort will necessarily be conditioned on the State of Vermont approving the assignment of the ground lease to the buyer. Importantly, the State of Vermont has already conducted its due diligence on Bear Den Partners and has already executed and consented to the assignment of the lease to Bear Den Partners. Therefore, this condition to close has already been satisfied with respect to Bear Den Partners while it would remain a condition to close as to any other potential buyer. Simply put, no other potential buyer is in the position to guaranty a smooth closing and requiring an auction risks losing the only legitimate bid existing at this time. Therefore, the Receiver believes dispensing with the auction process is in the best interest of the receivership estate.

Sources close to the sale indicate that Bear Den could close on Burke as early as next month, and that the new operators would immediately begin a massive snowmaking overhaul in advance of the 2025-26 ski season.

Jon Schaefer, who was listed in a Bear Den press release as the company’s “principal operator,” orchestrated gut-renovations of rusty Bosquet and Catamount ski areas in Massachusetts in recent years, demolishing and rebuilding lodges, chairlifts, and snowmaking infrastructure at sometimes frantic (and other times supply-chain-slowed) speeds. The notion of an experienced and aggressive operator leading the resurgence of an under-appreciated, high-potential resort in a crowded region that increasingly seems eager for a non-Epic, non-Ikon alternative is compelling.

But who the hell knows? Nothing is done until it’s done, and the knuckleheads who, according to Goldberg’s filing last week, “had agreed to pay $12 million for the Resort,” before “at the last minute right before execution of the contract … reduced its bid to $10 million” could materialize with some sort of legal maneuver to stall the sale.

Whatever happens, I’ll be here for it.