Questions Loom Around Lusso Bankruptcy

Lusso - Hawaii big island

Some questions are doomed to be left unanswered amid the muck of recent bankruptcies in the destination club industry. In December of last year, destination club the Lusso Collection filed for Chapter 11 bankruptcy, issued a brief statement to its members, and has since remained publicly silent. Our emails to the club’s management have gone unanswered, but a few updates have circulated through the courts nonetheless.

Ambx

Number of leased homes higher than expected

After the bankruptcy filing, a court document surfaced from members looking to get audited financials from the Lusso Collection management before handing over their next round of dues. The document, filed in the United States Bankruptcy Court for the District of Minnesota, claims that of the 26 Lusso property interests, only 5 were owned outright. The remaining properties consisted of 7 operating leases (short-term, not to finance), 11 capital leases (ownership of the asset is transferred to the lessee at the end of the lease term), and 3 non-subsidiary LLCs that control properties (who knows; financing members?).

Financing members allegedly did not pay initial deposits or yearly dues

The court document filed by the ad hoc committee of members also stated that certain financing members of the club (members who acquired or maintained properties) were perhaps not subject to any deposit or yearly dues agreements. The club had an estimated 150 members in total who paid refundable deposits of $425,000, and annual dues of $28,000. It is still unclear what has become of the member deposits.

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