by John Waters
Publisher

Lawyers for the bankrupt Lajitas Resort have postponed a bankruptcy court hearing until November 16. On November 14, the Associated Press reported a new $18 million bid for the resort. The AP reported two bids of approximately $18 million each, a substantial increase from the $13.5 million previous high bid.

Responding to a query from The Gazette, President of Lajitas Daniel Hostettler commented, “We have a couple loans working, and a couple more interested parties, so we postponed today's hearing until Friday morning [Nov. 2] at 9 am, at which point I expect it to be postponed again into next week so we can make sure that we get the highest and best offer for the creditors, as the current offer is only sufficient to pay the secured lender (PA Funding) and not the creditors…. I need to get an offer sufficient to pay the unsecured creditors something as well. If we are successful on the loans it would pay everyone in full.”

Hostettler has good reason to protect the unsecured creditors. He is one. Hostettler is, Principal, Chairman, and Chief Executive Officer of Santa Elena Hospitality Group, listed by the bankruptcy court as an unsecured nonpriority claim that is owed $104,961.12.

An auction held in San Antonio on October 18 ended without acceptance by the bankruptcy court due to insufficient bidding. During the all-day auction that began at 9 am, one fed-up bidder walked out shortly after 4 pm. The auction ended at 6 pm.

In late October, John Poindexter of Houston, speaking to The Gazette by phone moments before takeoff on a Northwest Airlines flight from Minneapolis to Detroit, confirmed that he had bid $2.25 million for the resort’s raw land in the latest bidding. Poindexter did not bid on the resort itself.

The resort, which sought bankruptcy protection on July 3, owes slightly over $14 million to Prime Asset Funding of Greenwich, Ct. Frank Harrison, Principal at Prime Asset declined to comment on the latest proceedings.

Unsecured creditors are owed at least $2 million. Various companies controlled by Lajitas owner Steve Smith are owed an unspecified amount.

Meantime, since the early July bankruptcy filing, the rumor mill in Terlingua has gone into hyperdrive. An ad hoc corporate conglomerate has emerged, with seemingly expert hotel consultants offering sagacious financial analysis, planning and strategy. Our favorite rumor of the batch was that a gay Saudi prince was going to buy the “ultimate hideout” – and then use it to raise goats.

At press time, the future of the resort, its executives, employees and creditors is unknown. The stress of uncertainty is taking a toll on employees who are racked by financial worries. Some employees have become reclusive, avoiding social situations due to others’ persistent questioning on, or pontificating about, the still uncertain future of Lajitas.

For one executive, the future is more certain. Lajitas Chief Executive Officer, Daniel Hostettler, has a new restaurant venture in Austin that opened this week: The Bread Bar is owned by Hostettler’s Santa Elena Hospitality Group. The eatery specializes in gourmet salads and sandwiches. On its website, the restaurant extols its expertise in managing exclusive enterprises: “We are currently engaged in just such an endeavor in the management and development of Lajitas, The Ultimate Hideout – a luxury resort and secondary residential community in Texas.” The website fails to mention the resort’s failure into bankruptcy and the financial debacle during Hostettler’s tenure as Chief Executive Officer there.

Perhaps by coincidence, the Bread Bar is located on Bee Cave Boulevard in Austin, only 3 miles from SRS Management, the holding company of Steve Smith, in all likelihood, the soon to be former owner of Lajitas, The Ultimate Hideout.