Liftopia spent $2 million of Ski Resort partners’ money, and now they can’t pay them back
Now, Mountain Collective Partners wants Liftopia's head...
Spending money that isn’t yours is never a good idea. That’s a lesson that ticket company Liftopia is learning the hard way, after they jumped the gun, shot their capital load and were left owing their resort partners millions.
Liftopia was one of the world’s first online lift ticket companies for ski resorts. Now, they are on a collision course with bankruptcy.
Sometime around April, Evan Reece, the CEO of Liftopia, sent an email warning all of his hundreds of ski resort partners that there would be a “delay” in payments owed for lift tickets and passes they’d already sold. In the email, Reece wrote that he needed to secure a “capital position” in order to pay his creditors back for the 2019/20 ski season… even though it was already over.
What that means in business speak, is that Liftopia spent their partner’s money, instead of returning the investment. Likely, they weren’t expecting COVID-19 to throw a monkey wrench into their system, and got caught with their pants down. And, needless to say, ski resort officials from Mountain Collective Partners were not happy with the news.
On April 20th, Matt Jones, the CFO of Aspen Ski Company, asked Liftopia how much they owed Mountain Collective Partners.
“About $2m.” was Reece’s response.
Jones then asked when they could expect that by.
“The timeline is imprecise for now,” replied Reece. “I anticipate pain for my existing cap table, but that partners get paid.”
That was not what Jones (or any other Liftopia resort partner) wanted to hear. Within minutes, Jones had responded asking for more clarity.
“So you have spent our money on other things, like rent and payroll and therefore it’s gone?” he asked, incredulity seeping through his typed words. “Trying to understand what happened to our revenues, which to be clear, were never yours to begin with.”
That’s a fair question. It would be like if a pizza delivery guy accepted your payment for the pizza, bought himself lunch with it and then shrugged awkwardly when his boss asked, “What happened to the goddamned money?!”
Because of this, many smaller resorts were forced to furlough and even outright lay off employees in April. They couldn’t afford to keep them on, because the money Liftopia owed them was stalled.
All of this has culminated in a lawsuit against Liftopia (bet you didn’t see that coming!). Aspen Skiing Co., Alterra Mountain Co., Arapahoe Basin and Canada’s Cypress Hill have all co-signed a petition requesting a federal judge force Liftopia into bankruptcy, and demanding their $2.38 million in full.
Of course, Liftopia is disputing this lawsuit. Reece says that actually they only owe these resorts $2.1 million (a difference of $86,000), and that, that dispute in amount is enough to dismiss the petition outright.
Unfortunately for Liftopia, that’s not how the Mountain Collective Partners’ or their lawyers see it. They called the dispute an attempt to buy time, “rather than taking responsibility for its financial missteps when faced with the reckoning of the involuntary petition.”
In a statement to Rooster Magazine, Aspen Ski Company said, "We have been seeking resolution of this situation for many months and, unfortunately, it has not appeared that Liftopia has appreciated the severity of the concerns of its creditors ... we felt we had no choice but to take the steps we did to protect the interests of all of Liftopia’s creditors, most directly, those of the Mountain Collective member resorts."
Things are looking grim for Liftopia and that certainly isn’t something to celebrate (even if they did make a pretty fatalistic mistake). Liftopia serves a lot of small mountains and resorts who really lean on them to help move their tickets and season pass sales. If they go under, those mountains and resorts who rely on them, will start treading water too.
A sinking tide lowers all ships.
Still, it’s hard to have a lot of sympathy for Liftopia, given the circumstances. The company was pocketing money that didn’t belong to it, to pay its own expenses — while at the same time, their smaller partners were furloughing people, outright laying others off, and cutting costs wherever they could to get by.
There’s something pretty oily about that kind of middle-man scheme.