Uncertainty continues to surround the Uptown 240 condominium project in downtown Dillon as documents filed in U.S. Bankruptcy Court District of Colorado indicate a scheduled bankruptcy sale was vacated.

Uptown 240 received two bids last month during the sales process for the stalled condominium project but neither was enough to cover the company’s debts, Dillon Town Manager Nathan Johnson told the town council Tuesday, Oct. 3.

The highest bid for the 80-unit luxury condo project at 240 Lake Dillon Drive came in at $12.75 million, “which is not enough to eliminate the debt on the title,” Johnson said. He hinted at a bleak picture that appears to be painted for unsecured debtors, including 41 individuals who collectively put $6 million in deposits down on units.

“Clearly we tried to help these things,” Johnson said. “It just didn’t work out as what it was intended to do in terms of trying to get money back to those unsecured debtors.”

At the urging of representatives of the committee of unsecured creditors, the Dillon Town Council reinstated the development permit for a potential buyer of the bankrupt condominium project last month, hoping to raise the market value of the property.

The goal of hiring Hilco Real Estate to conduct a bankruptcy sale was to sell the property for as much as possible, Uptown 240’s bankruptcy attorney Keri Riley previously told the town council. At the time Riley said the sales price would have to cover the approximately $14 million due to secured creditors before unsecured creditors would see a dime.

The local restaurateurs-turned-developers behind Uptown 240 promised for years to complete the condominium project themselves, including as recently as this past spring. The family restaurant at the site was demolished to make way for the planned condominium project in 2018, which broke ground the following year. But the company’s original financiers backed out during the pandemic.

Construction was supposed to resume in November 2020 and again in February 2021 but never did. Then this past February, Uptown 240 filed for bankruptcy the day before a scheduled foreclosure auction.

After a sprawling saga, the property could be headed to foreclosure again. According to the terms of a settlement agreement, Uptown 240 must pay its primary lender, JGJP Dillon LLC, $9.25 million before Oct. 18, otherwise JGJP Dillon will be allowed to foreclose on the property.

In an Oct. 3 order vacating scheduled sale and confirmation hearings, federal bankruptcy Judge Thomas McNamara noted a motion to approve a sale had not been filed and a late motion would violate Uptown 240’s settlement agreement with JGJP Dillon.

“Foreclosure is a worst-case scenario because that would ultimately end up with everyone involved walking away empty-handed, except the primary lender,” Hilco Real Estate senior associate Michael Kneifel said in a previous interview.

But Developer Jake Porritt, of JGJP Dillon, indicated at the Oct. 3 town council meeting that he has “expressed another opportunity to try to provide an opportunity for a resolution that would lead to potential help for those unsecureds.”

With the Oct. 18 deadline looming, Porritt added, “So we’ll see if anything materializes.”