Industry News
Netflix founder Reed Hastings is facing a $75.9 million lawsuit involving Powder Mountain, Utah, with a group of EB-5 investors who say he’s on the hook for an unpaid debt tied to the resort. According to a lawsuit filed in Manhattan Supreme Court in April, the investors have been attempting to recoup their $42 million investment, along with interest, since 2021.
Hastings purchased Powder Mountain in 2023 and paid $100 million for a controlling stake in Summit Mountain Holding Group. Summit is the subsidiary that owns the mountain and its debt, according to court filings obtained by The Real Deal in the New York case, which is under seal.
The lawsuit stems from the EB-5 investors claiming that they had not been repaid for a loan from 2016 when Hasting did not own the mountain. On July 6, 2016, the investors sent a default notice stating that Summit had defaulted on the $120 million loan and was required to pay $51.3 million, plus $360,600 in interest.
Summit then countered, accusing the lenders of breaching the contract by failing to deliver loan proceeds on schedule and not sending more than $42 million by the end of 2019. Summit also said that it had already fulfilled its share of the $35.9 million equity requirement. Summit claimed that because the lenders allegedly stopped providing their support, it had been deprived of at least $50 million that the project would have generated by then. Therefore, it could not repay the $42 million it received, the suit stated.
Several projects failed to be completed after Summit received the EB-5 fund. The developers added a road and several structures, but the promised condos, townhouses, and hotel never happened. Summit ceased making payments on its EB-5 loan in January 2019, having raised only $42 million in investment, according to court filings.
The legal battles continued in 2021 and a default notice was sent to Summit. The debt came due in June 2021, and talks quickly fell apart, triggering a default notice later that same year. The case was still pending before the Utah Supreme Court in 2023 when Hastings acquired Powder Mountain. Despite the lawsuit, Hastings’ plans for enhanced infrastructure, new lifts, and distinctive art installations are forging ahead.
Hastings has invested millions to revitalize the resort, creating over 2,000 acres that will be used by private owners. Homeowners and members will pay annual fees of up to $100,000. The introduction of semi-private skiing at Powder has been met with criticism. Although some of the lifts are now private, the public can ski all of the resort’s terrain. This lawsuit is something most resorts will be paying attention to. It could affect how future projects in the ski industry are financed and managed. It also involves the largest ski resort, by terrain, in the country, with a high-profile entrepreneur in Hastings. In June, Hastings lawyers asked a judge to dismiss the lawsuit.
Reed has ruined this mountain trying to make it an exclusive resort (aka Deer Valley v2) for his rich buddies. Best case scenario is he fails and it gets sold to someone who isn’t an elitist.