While not abandoning the possibility of completing the project itself, Uptown 240 has hired a real estate company to sell its embattled condominium project in downtown Dillon at a bankruptcy sale later this year.

Hilco Real Estate will be soliciting bids for the property at 240 Lake Dillon Drive ahead of a Sept. 12 bid deadline, according to Keri Riley, a bankruptcy attorney representing Uptown 240. Yet, simultaneous to the sale, Uptown 240 will continue to pursue the option of refinancing the debt and complete construction of the luxury condominium complex themselves, Riley said. 

“With respect to the refinance or sale, the two are mutually exclusive,” Riley said in an email. “We are currently open to all prospects that maximize value, which is why we are currently pursuing this sale as well so that we can ensure that we have all options available.”

The original financiers behind the 80-unit complex backed out during the pandemic, and little progress has been made beyond pouring a foundation since crews broke ground on the structure in June 2019. 

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.

Most recently, Uptown 240 president Danilo Ottoborgo in May told a skeptical Dillon Town Council that the company could emerge successfully from bankruptcy proceedings and complete the project within 18 months.

The potential bankruptcy sale comes as Uptown 240 has reached a global settlement with JGJP Dillon LLC, which purchased the debt on the project last year, Riley said. The settlement agreement, which is subject to court approval, requires specific timelines for repayment of JGJP Dillon’s claim, she said.

Developer Jake Porritt, who is proposing a major redevelopment of Dillon’s town core, is also the registered agent for JGJP Dillon LLC. Earlier this year Porritt asked the U.S. Bankruptcy Court to foreclose on the Uptown 240 property, before the company filed for bankruptcy. Porritt did not respond to a request for comment.

Dillon Town Manager Nathan Johnson confirmed Thursday that the town is aware of the bankruptcy sale.

“We’re still trying to get all the facts before we can really talk intelligently about what is going on here,” Johnson said.

36,000 people get the latest news from us daily. You should, too.

Sign up for daily or weekly newsletters at SummitDaily.com/newsletter

With the bankruptcy sale moving forward, the Uptown 240 property could be under new ownership as soon as late September or early October, Hilco senior associate Michael Kneifel said.

“Hilco is the best opportunity to get this sold,” Kneifel said. “We are well versed in bankruptcy and have been part of some of the largest-scale bankruptcies to date.”

Describing Uptown 240 as a “busted multifamily development,” Kneifel said the property is expected to go up for sale at a virtual auction scheduled three to five days after the Sept. 12 bid deadline. 

Compared to a foreclosure sale, Kneifel said, a bankruptcy sale increases the chances that those who sunk money into the project could recoup at least some of their investment.

“Foreclosure is a worst-case scenario because that would ultimately end up with everyone involved walking away empty-handed except the primary lender,” Kneifel said.

The bankruptcy sale aims to maximize the value of the property, Kneifel said. That means unsecured creditors, including would-be residents who have collectively sunk millions of dollars into the project, could potentially see part of their investment returned if the sale of the property is in excess of what is needed to cover secured debts, he said.

Which creditors are paid through any potential sale of the property would be dependent upon the price received through the bidding process and “the priorities imposed by the Bankruptcy Code,” Riley said.

“Until the property is actually sold, there is no way to determine the payout to creditors,” she said.

Whether Uptown 240 keeps the property or it is sold, hurdles remain to completing the project.

In May, the Dillon building department notified representatives of Uptown 240 that the building permit and with it, the company’s vested rights in the property, expired the month prior. In order to complete the project, the Dillon Town Council would likely either have to vote to extend the vested rights or the project would have to start the planning process from scratch.

Moreover, Johnson has said that the project was approved under 2012 building codes, but Uptown 240 would now have to comply with 2018 building codes, including new sustainability codes.

The town has also contended that the existing foundation will have to be torn down and started from scratch. But Kneifel said Uptown 240 has provided appraisals completed as recently as 2022 that show the foundation is sound and construction could resume.

Hilco marketing materials for the property describe the project as 40% complete and outline the potential for the completion of the building, with two levels dedicated to parking and retail and four stories boasting luxury condos with open floor plans and mountain views.

Riley said Uptown 240 is hopeful that if the project is sold, the new owners will complete the project as envisioned.

“We are hopeful that any buyer completes the project in a manner consistent with the existing vision and that it will provide exceptional quality condominiums in the picturesque location,” Riley said. “It will ultimately be up to the buyer to determine how to complete the project in a manner that will provide a benefit to the town and its residents and those looking to own property in the area.”