The town of Mammoth Lakes, California, best known for its world-class skiing and snowboarding, has filed for bankruptcy in the face of a $43-million breach-of-contract judgment brought against the town by a developer.
According to the LA Times, Mammoth Lakes officials said in an prepared statement that “bankruptcy, unfortunately, is the only option left” for the town, whose largest creditor, Mammoth Lakes Land Acquisition, had won a state court order requiring full payment by June 30, 2012.
GrindTV.com breaks down the back-story leading up to the town’s bankruptcy:
Mammoth Lakes in 1997 signed an agreement with Mammoth Lakes Land Acquisition that required the developer to make substantial improvements to Mammoth-Yosemite Airport’s fixed-base operations.
The developer, in turn, earned rights to develop a $400-million hotel project on 25 acres of airport land, with an option to buy the land.
Difficulties ensued when the Federal Aviation Administration raised concerns about MLLA’s proposed improvements and the town subsequently abandoned airport expansion plans.
Following the ordeal, the developer sued Mammoth Lakes for breach of contract and won a $30 million judgment, which with interest now stands at $43 million.
Per Mammoth’s chapter bankruptcy 9 filing, the town plans to ask the court to approve a 10-year payment plan of about $500,000 a year. That way it can assure operating with enough services to assure operating with enough services to assure the safety of residents and tourists.
So what effect will Mammoth Lakes’ bankruptcy filing have on the hordes of snowboarders and skiers that flock to the slopes of its Eastern Sierra location each year? Probably not much, according to the Sierra Sun Times, who writes:
While the town proceeds with its Chapter 9 bankruptcy case, Mammoth Lakes will remain open for business and hopefully the famous ski area, which suffered largely because of a paltry snow season in 2011-12, will rebound with a big winter in 2012-13.