Shambhala Center files for bankruptcy reorganization after COVID, Cameron Peak Fire

Shambhala Mountain Center, which changed its name to Drala Mountain Center in February, filed for Chapter 11 bankruptcy Monday, citing a 2018 sex scandal, the Cameron Peak Fire and COVID-19, which resulted in months-long shutdowns and losses of revenue.

The center is a sacred Buddhist retreat surrounded by 600 acres off Larimer County Road 74E in Red Feather Lakes, about an hour northwest of Fort Collins. It features the Great Stupa, an example of Buddhist sacred architecture that promotes harmony, prosperity, longevity, good health and peace.

Dhi Good, a spokesperson for the nonprofit, said in a press release that Drala will continue to operate as usual this year as the bankruptcy is sorted out.

Previously: Shambhala Mountain Center west of Fort Collins issues apology after newspaper report

The 51-year-old nonprofit filed a voluntary petition in District 10 Bankruptcy Court in Denver under subchapter V of Chapter 11 of the U.S. bankruptcy code, which makes reorganization bankruptcies more accessible to small businesses by streamlining processes and minimizing legal costs.

Drala Mountain Center reported assets of between $1 million and $10 million and liabilities in the same range.

According to Drala's press release, the nonprofit financed $4.1 million in building development through a combination of economic development revenue bonds and secured loans through Wells Fargo Bank in 2005.

In 2015, Wells Fargo consolidated all of DMC's outstanding debt into a single loan through June 1, 2016. The loan was secured by some of DMC's personal property and deeds of trust on some of its real estate.

The debt was restructured many times, DMC said, with the maturity date for the loan extended to November 2019. According to DMC, it was notified in September 2019 the loan would not be extended beyond Nov. 30, 2019. But through a series of forbearance agreements, Wells Fargo agreed to take reduced monthly payments of $5,000 and not seek any other legal remedies through Oct. 31, 2021.

In May 2021, Wells Fargo sold the loan to RH Fund XXII LLC, a private distressed debt fund/debt acquisition firm managed by Red Hills Holdings, which extended the forbearance until Feb. 28 in exchange for a one-time $25,000 payment to cover accrued interest and continuation of the $5,000 monthly payments.

The Pema Chodron Foundation stepped in in February, committing to donate $500,000 toward raising funds to help pay down the Wells Fargo debt if DMC could raise an additional $500,000 in matching donations and launch a broader fundraising campaign this year.

But Red Hills Holdings and DMC were unable to come to terms, which led Drala Mountain Center to file the voluntary bankruptcy petition, according to DMC. Under Chapter 11, it can continue operating without threat of foreclosure while it charts a clear financial path forward.

Good said other donors have already committed substantially more than half of the $500,000 matching amount.

Bankruptcy documents show DMC's major unsecured creditors as First Insurance Funding of Northbrook, Illinois, $296,374; the Internal Revenue Service, $142,579; Robery King and Lindy King of Boulder, $68,073; Shambhala USA of Boulder, $230,000; Poudre Valley REA, $5,901, Poudre Valley Co-op, $5,520, and Kaiser Permanente, $1,172 for employer health insurance premiums; among others.

Executive Director Michael Gayner said in the press release, "We recognize the important role DMC plays in the lives of so many people, particularly during these challenging times when people seek restoration, refuge and inspiration. We look forward to fulfilling our mission of bringing people together to experience wisdom in the coming weeks and months, and for years to come."

According to DMC documents, the organization hosted more than 10,000 overnight guests and day visitors per year and received more than 5,500 individual donations, totaling on average more than $750,000 per year, in pre-pandemic days.

Already reeling from a loss of revenue amid a sex scandal involving one of its prominent Buddhist teachers and leader, Sakyong Mipham Rinpoche, the financial setbacks were compounded when the organization shut down its facilities from March 2020 to July 2021 due to COVID-19 and the Cameron Peak Fire in August 2020. The fire destroyed several buildings and damaged water, sewer and electrical systems.

Previously: Teacher at Boulder Shambhala Center arrested for child sex assault

Following the fire, donors contributed more than $600,000 to rebuild and repair the property. In July 2021, it reopened on a limited basis as the pandemic continued to make in-person gatherings a challenge.

Since reopening, DMC has held in-person programs for more than 1,300 overnight guests, 600 online participants and thousands of day visitors, the nonprofit said in bankruptcy documents.

While DMC is affiliated with Shambhala International, it is a standalone nonprofit managed by a six-member board of directors.

Pat Ferrier is a senior reporter covering business, health care and growth issues in Northern Colorado. Contact her at patferrier@coloradoan.com. Please support her work and that of other Coloradoan journalists by purchasing a subscription today.

This article originally appeared on Fort Collins Coloradoan: Shambhala Mountain Center near Red Feather Lakes files for bankruptcy