In Bankruptcy News

Parkprovo, LLC, which owns the Seven Peaks water park in Provo, Utah, which has operated for over 20 years, filed bankruptcy last month, putting the summer season in doubt.  The filing was reported by the Daily Herald.

The case was filed as a Chapter 11 proceeding. Fifty-five creditors were listed in the filing, with assets of $16,780,000 and debt of $9,195,000. The assets consist completely of the real property where the park is located. According to the documents filed in the case, this real property is in the hands of a court appointed receiver in a case pending in Provo. The appointment of a receiver means that a court has appointed a person, the receiver, to take control of the entity’s property. A state receivership is similar to a bankruptcy proceeding, except that it is governed by state rather than federal law. Parkprovo’s bankruptcy filing indicates the receiver was appointed in February of this year.

A bankruptcy filing takes precedence over a state receivership case. In Chapter 11 the business that files is initially managed by the management in place at the time of the filing. This is called a debtor in possession case. It is possible, though fairly uncommon, for the debtor in possession to be replaced by a court appointed trustee.

According to a status report filed on May 18 by Parkprovo in its bankruptcy, the former operator for Seven Peaks had failed to pay the monthly rent for several months, which prompted the state court case appointing a receiver. Parkprovo found another potential operator for Seven Peaks but that entity also failed to pay the necessary deposit. That led to this Chapter 11 filing. The status report indicates that it is Parkprovo’s intent to sell the Seven Peaks water park at auction and pay its debts from the sale.

The prime operating time for a water park is between Memorial Day and Labor Day. It seems highly unlikely that Parkprovo will find a buyer in time for the 2018 season. A purchaser might decide not to continue to operate the Seven Peaks water park even if the sale takes place. The future of water parks in Provo looks grim at this time.

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