Glen Ivy Talks of Bankruptcy, Then Drops Idea : Resorts: Contradictory statements issued by time-share company whose sales practices are under criminal investigation.
Glen Ivy Financial Group, a time-share resort operator facing a criminal investigation of its sales practices, said Thursday afternoon that it was considering filing for federal bankruptcy protection. Hours later, the company reversed itself and said it does not expect to file for bankruptcy.
The statements follow a Tuesday raid on Glen Ivy’s offices in Corona by state and local law-enforcement agents who searched for evidence of alleged overselling of some of the company’s 24 time-share resorts. The company’s operations are under investigation by the Riverside County district attorney, California attorney general and state Department of Real Estate.
In past interviews, Glen Ivy officials have vehemently denied customer complaints that the company oversold its time shares by selling more weeks than permitted under state law. The company has not been formally charged with any wrongdoing.
Meanwhile, the time-share industry’s principal trade group--the American Resort and Residential Development Assn.--met in emergency session Thursday in Del Mar to discuss the Glen Ivy situation and its impact on the industry.
Glen Ivy, the nation’s largest time-share operator, reopened its sales offices Thursday after two days of searches by more than 100 agents. In the first of the two statements issued Thursday, the company said that filing for bankruptcy was “one of a number of possibilities” under consideration by management.
In the second statement, Glen Ivy said that “there is no reason to believe that protection under federal bankruptcy laws would be necessary.”
A source close to the company said that bankruptcy lawyers were consulted on Wednesday and that management is now divided on whether to pursue a Chapter 11 filing, which would protect the company from creditors’ claims while it attempted to reorganize its operations.
“It would be totally nuts for them to file bankruptcy,” said one Glen Ivy official, who asked not to be named. “The company’s entire business is based on the trust of people who buy vacations.”
That trust, however, may be eroding.
After the American Resort and Residential Development Assn.'s Thursday meeting, attended by about 30 time-share company representatives, the trade group said it had formed a task force to provide technical expertise to state investigators looking into Glen Ivy.
“Allegations of criminal activity or ethics violations are not tolerated by our association,” the group’s president, Tom Franks, said in a statement. “Our priority now is to assist owners of Glen Ivy resorts and reaffirm that their ownership interests are protected.”
Time-share units offer buyers the right to stay at a resort--usually in a condominium--for one week a year. Glen Ivy has 60,000 time-share owners.
Glen Ivy spokesman Alexander Auerbach said Thursday that the company “will make every effort to cooperate with the task force.”
State authorities are scheduled to meet with Glen Ivy officials Friday morning to brief them on their investigation.