Four creditors forced epic into involuntary bankruptcy in July 2001. The following October, the company converted that bankruptcy to Chapter 11 bankruptcy protection, and Schnelling was named trustee.
The relationship between him and the owners was so contentious that in September 2002, Schnelling leveled a $30-million lawsuit against the principals, charging them with fraud.
Thomas Flatley, president and CEO, and the four executives ran the Epic Vacation Club, which is responsible for collecting timeshare customers' dues. As many as a quarter of the approximately 20,000 customers are said to have defaulted, primarily over concern for their investment.
Under the current settlement, Schnelling serves on the board of the vacation club, and Flatley resigns from that board. "All allegations of any wrongdoing alleged against any of the parties have been withdrawn," according to a printed statement from Schnelling.
In conjunction with the settlement, Epic closed on a $6-million post-petition loan from funds managed by Dallas-based Highland Capital Management. The financing will fund operating costs for the corporation, the vacation club and the homeowners' associations until Schnelling finds a buyer for Epic debtors' assets.
The Epic properties are in Lake Havasu and Scottsdale, AZ; Daytona, FL; Hilton Head, SC; Palm Springs, CA, and Las Vegas.
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