Tanner & Haley Resorts Files to Reorganize under Chapter 11; Company Obtains Commitment for $10 Million in Interim Financing to Support Continued Business Operations

Business Wire, July 24, 2006

WESTPORT, Conn. -- Tanner & Haley Resorts:

--Holly Etlin of XRoads Solutions Group LLC Named Chief Restructuring Officer

--Company Intends to Continue to Meet Substantially All Travel Commitments Made to Destination Club Members

--Will Explore Opportunities to Strengthen Business Model

Tanner & Haley Resorts, a leading, privately held destination club enterprise based in Westport, Conn., today announced that its U.S.-based operations, principally including Preferred Retreats, LLC and Complete Retreats, LLC, have filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code. Tanner & Haley has taken this action to enhance its ability to meet its financial obligations, modify its business model and position the company for long-term stability. The Chapter 11 filing was made on July 23 in the U.S. Bankruptcy Court for the District of Connecticut in Bridgeport, Conn.

In connection with the financial reorganization, Tanner & Haley has obtained a commitment from its principal pre-petition lenders, The Patriot Group, LLC, and Beal Bank, S.S.B., for interim debtor-in-possession (DIP) financing of $10 million. This interim financing and the company's pre-petition credit facilities will be replaced in due course by a permanent credit facility of up to $85 million. The purpose of this financing, which is subject to court approval, is to help ensure Tanner & Haley's ability to continue to operate in the ordinary course, such as meeting its employee payroll and post-petition vendor obligations during the reorganization process.

Tanner & Haley remains in operation and is continuing to serve its Members. The company intends to continue to meet substantially all travel commitments previously made to Members and to continue to provide Members with a wide range of destinations and services.

Tanner & Haley also announced today that Holly Felder Etlin, a Principal at XRoads Solutions Group LLC, has been named Chief Restructuring Officer, a new position, effective immediately. In this capacity she will work with the company's existing management team in overseeing day-to-day operations, financial matters and strategic planning. Ms. Etlin has more than 25 years of experience providing restructuring and reorganization services to companies and their creditors in the retail, distribution, consumer products, and health care industries. Most recently she served as turnaround advisor to Winn-Dixie Stores, Inc., Chief Restructuring Officer at Impath, Inc. and Chief Restructuring Officer of San Francisco Music Box and The Museum Company.

Rob McGrath, founder and Chief Executive Officer of Tanner & Haley, said: "We deeply regret any impact the Chapter 11 filing may have on our Members and other creditors. Now, as always, we appreciate the interest and support of our Members, employees, vendors and other business partners. Together, we hope to position the company for continued leadership in the hospitality industry for many years to come."

In a letter sent today to its Members, Tanner & Haley said that its financial difficulties were largely attributable to a business model that proved to be unsustainable, with revenues unable to keep pace with the costs associated with its "members-first" approach. Among other things, the company in the past rarely refused a Member's travel request, and if a desired property in the company's portfolio was unavailable when requested, the company would commonly enter into a costly short-term lease with a third party. In addition, many destination club members received their memberships at a deep discount and/or locked in extremely low annual dues and daily usage fees. The company also pursued various business and real-estate ventures that it believed to be synergistic but that ultimately proved unsuccessful. Such factors, coupled with increasingly stiff competition in its industry, made it difficult for the company to pay its bills, make planned improvements on existing properties and invest in new properties. Accordingly, the company intends to use the Chapter 11 process to stabilize its finances and develop a more viable business model.

Ms. Etlin said: "As part of the Chapter 11 process, we will be reviewing and, where appropriate, revising Tanner & Haley's business model so that, upon completion of the financial reorganization, the company will be better positioned to achieve long-term strength, stability, profitability and growth. We are also committed to having the company emerge from the process with greatly enhanced corporate governance and financial transparency."

The company has filed several first day motions in the Connecticut bankruptcy court to support its ongoing U.S. operations, including requests for interim approval of the DIP facility and for permission to pay employees and continue employee benefit programs during the reorganization process, both of which are expected to be approved shortly.

Tanner & Haley's legal counsel with regard to its financial reorganization is Dechert LLP.