A New Jersey timeshare resort operator has filed a detailed liquidation plan in its Chapter 11 bankruptcy case, proposing to sell its Atlantic City-area properties to a company led by former executives while facing substantial litigation claims.
Flagship Resort Development Corporation, which operates three resort properties with approximately 37,000 timeshare intervals across Atlantic City and Brigantine, filed its disclosure statement for a plan of liquidation on July 1 in the U.S. Bankruptcy Court for the District of New Jersey. The company is seeking court approval to sell substantially all its assets to AC Boardwalk Investments, LLC, which would serve as the "stalking horse bidder" in a competitive auction process.
According to the disclosure statement, AC Boardwalk—an entity wholly owned by Kevin Jones and Roxanne Passarella—has offered $5 million in cash plus assumption of approximately $40.5 million in receivables financing obligations. Jones and Passarella appear to be former Co-CEOs of the debtor, according to information in the filing.
"The Debtor believes that the Plan is in the best interests of the Estate," the company stated in its disclosure statement, adding that its proposed auction would maximize value while preserving the ongoing business.
The bankruptcy filing comes after years of financial strain that the company attributed to several factors including the COVID-19 pandemic, rising interest rates, reduced margins on consumer financing, and increasing timeshare defaults that approached 40%.
Flagship Resort Development Corporation operated three properties: the 32-story Flagship Resort with over 440 units in Atlantic City, the 31-story Atlantic Palace with approximately 292 suites on the Atlantic City Boardwalk, and the 5-story La Sammana Resort with 62 units in Brigantine, New Jersey.
The bankruptcy case revealed the company had accrued substantial arrearages for maintenance fees and similar expenses owed to ownership associations. These obligations were embodied in promissory notes totaling $8.3 million as of September 2024. Additionally, the company reported secured debt of approximately $25.4 million owed to Banc of California and $15.1 million owed to Colebrook Financial Company.
The disclosure statement outlined a key legal battle that contributed to the bankruptcy filing. In 2018, a group of plaintiffs brought an action against Flagship alleging deceptive sales practices in violation of New Jersey laws. After an eighteen-day trial, a jury awarded damages that resulted in a final judgment of approximately $1.67 million. A second similar lawsuit and a broader class action followed, with the class action being certified in July 2024.
The bankruptcy process includes a competitive bidding procedure for the company's assets, with bids due by July 31, 2025, and an auction scheduled for August 5. The company has established a general claims bar date of July 21, 2025, and set August 7 as the deadline for creditors to vote on the plan. A confirmation hearing is scheduled for August 13, 2025.
The Official Committee of Unsecured Creditors, appointed on May 30, 2025, consists of Flagship Condominium Association, Inc., Royal Suites Interval Owners Association, Inc., and a representative from the class action litigation.
The proposed plan divides creditors into eight classes, with secured creditors receiving either assumption of their claims by the buyer or payment from sale proceeds, while general unsecured creditors would share in any remaining proceeds after payment of priority claims.
Law firm Porzio, Bromberg & Newman, P.C. is representing the debtor in the bankruptcy proceedings, with attorneys Warren J. Martin, Jr., Rachel A. Parisi, and Christopher P. Mazza handling the case.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 66 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.