Makena Resort and its hotel, the Maui Prince, are now a toxic asset with creditors including the Swiss government.
UBS, the Swiss banking giant, put together the financing for the eye-popping sale of the resort for $575 million in 2007, using the commercial real estate version of the mortgage-backed residential real estate securities that caused so much grief in the housing market.
Only in this case, according to Barry Sullivan, the Honolulu attorney handling the foreclosure, there was no Fannie Mae or Freddie Mac to purchase the bonds created to fund the deal.
In this case, the lenders foreclose, the court appoints a receiver and eventually the receiver will hold an auction. If anybody bids, then the lenders get back some or all of their money.