High Country Club Files For Chapter 7 Bankruptcy

Bookended by a precipitous rise to the top of the destination club industry and by a meteoric collapse, High Country Club has announced it will file for Chapter 7 bankruptcy next week.
In a candid letter to the club's members sent last week, Christian Kirschner, High Country Club's CEO wrote:

Effective immediately, High Country Club will no longer be in business. Along with our bankruptcy attorneys, we are in the process of filing Chapter 7 bankruptcy next week.

The severe decline in the economy has made it impossible to operate our business. Our team has worked tirelessly over the past 120 days to restructure and save the business. However, multiplying outside factors and a declining membership has made operations impossible.

Effective immediately all reservations are canceled.

We expect that the bankruptcy court will be in contact with members after our filing next week.

I offer my sincerest apologies and regrets as the current business and economic environment has made it impossible for HCC to operate.

Christian V. Kirschner
President & CEO
High Country Club

Founded as a specialty destination club focused on the affluent ski audience, High Country Club entered the industry as a low cost alternative to the myriad of other more costly destination clubs that dominated the industry. As the sole club in the sub-$50,000 price point, High Country Club soon emerged as a destination club power, consistently meeting sales and revenue goals and serving as a founding member of the Destination Club Association.

The club's ability to generate a continual stream of new sales led to over reaching on real estate, purchasing luxury vacation homes outside of their business model's price range. In their attempt to remain the most cost effective destination club, annual dues, the club's yearly payments made by club members used to pay for the club's ongoing operations, were set below the club's operational burn rate.

As the real estate and financial markets began to decline, so did sales for High Country Club. Often selling upwards of 30 memberships per month, the club's sales initiatives began to yield single digits in the months prior to their bankruptcy.

With club sales eroding and facing financing issues from lenders, High Country Club executives attempted to merge with another destination club, only to have the buyer back out in early October of 2008. In a letter to High Country Club members regarding the destination club merger sent on October 28, Kirschner wrote "I approached several destination clubs and we made a decision to move forward with one. Documents were signed and the integration process had begun. Two and a half weeks ago the deal was terminated due to the difficulties created by the extraordinary economic events of the past 45 days...There was never any doubt in my mind we would not close on this transaction for several reasons...The economic events of the past 45 days changed everything."

With anemic sales and growing debt obligations, High Country Club created a Success Plan that theoretically would allow the club to become self sufficient and operational solely on membership dues. The plan consisted primarily of increased annual dues for members, decreases in properties available to members, and drastic layoffs to High Country Club staff to reduce overhead.

For the plan to succeed, approximately 75 percent of the membership base needed to agree to sign off on new addendums outlining these terms. While the club approached the 75 percent barrier, ultimately it fell just short, leading management to create a new alternative to members, the High Country Club Sustainability Plan.

The Sustainability Plan also failed to create the self sufficient model club executives and members sought.

With High Country Club's upcoming Chapter 7 filing, they join One Key World and Lusso Collection as firms starting 2009 poorly. One Key World and their rental brokerage model was forced to cease operations earlier this month while the Lusso Collection is currently going through Chapter 11 bankruptcy.

Despite Kirschner's immediate closure notice, expect more news about High Country Club to follow as creditors, real estate owners, and members alike continue asking questions about how High Country Club reached this point.

Original Article
High Country Club Files For Chapter 7 Bankruptcy