Island One committee blasts plan, asset sale, cites lenders' control

By Caroline Salls

Pittsburgh, April 14 - Island One, Inc.'s official committee of unsecured creditors objected to the company's proposed disclosure statement, plan of reorganization and asset sale Wednesday, arguing that they are "the product of a fundamentally flawed process that has been pursued for the sole benefit of the debtors' insiders and majority lenders, Textron Financial Corp. and Liberty Bank, NA."

According to the objection filed with the U.S. Bankruptcy Court for the Middle District of Florida, "the current plan and disclosure statement are the result of the debtors' and the majority lenders' absolute failure to provide due process to interested parties throughout these Chapter 11 cases and are proposed in bad faith."

The committee said Island One's management has been "essentially doing the bidding" of the majority lenders, and principal officer Deborah Linden is beholden to the lenders as a result of a substantial personal guarantee.

In addition, the committee said the company moved forward with the auction for substantially all of its assets to accept a non-qualifying bid submitted by Timeshare Acquisitions, LLC, even though no qualified bids had been received.

Island One, an Orlando, Fla.-based timeshare resort development and hospitality management company, filed for bankruptcy on Sept. 10, 2010. Its Chapter 11 case number is 10-16177.

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