The developer of the Silver Creek ski resort in West Virginia filed a reorganization plan in federal bankruptcy court last week that asks the court to lift a lien the Federal Savings and Loan Insurance Corp. has against the project so development can continue.

The developer, American Resort Services, had filed for bankruptcy under Chapter 11 of the bankruptcy code this past June to prevent FSLIC from selling the 2,600-acre property at public auction.

Silver Creek, a partially built new resort on Cheat Mountain near Slatyfork, slipped into financial difficulties two years ago when its lead lender, San Marino Savings and Loan of Orange, Calif., was taken over by FSLIC.

Since then, FSLIC has spent $17 million on Silver Creek in addition to the $17 million lent the company by San Marino, ARS officials say. Despite the infusion of funds, however, FSLIC has done little in its management of Silver Creek to advance completion of the resort, according to the developer.

Construction of Silver Creek started in 1983. It was designed to function as a condominium-hotel, a new breed of resort development that is supposed to provide investors with vacation homes and tax shelters. Owners can use their unit all year or limit family use to two weeks a year and derive tax benefits by renting it like a hotel room during the rest of the year. The units were to be sold furnished, and the developer planned to provide a service to handle the rentals.

Keith Romney, a resort development consultant, said that lenders have become increasingly reluctant to put up the enormous equity required to build four-season resort communities laden with glamorous amenities, such as Silver Creek, and that condo hotels can be a "very handy financing tool," especially if developers can sell units before constructing them.

While ARS had pre-sale deposits on most of the units in the first three wings of its five-wing flagship lodge, the company was not able to take those units to settlement once FSLIC took over San Marino's loan secured against the property. FSLIC, which holds $33.5 million in debt on the property, has been unwilling to let the developer close on the units because they represent the government's only major asset.

With no capital of its own and caught in a half-built state by San Marino's unexpected failure, ARS claims it has gotten little support from FSLIC in compromising on a plan that would allow development to continue, generating the funds needed to pay off the liabilities.

FSLIC officials, however, have said that they still would like to foreclose on the property and sell it to another resort developer because the debt to FSLIC is "significantly greater" than the money the individual units would bring if sold to the purchasers.

Judge Rufus W. Reynolds of the U.S. Bankruptcy Court for the District of South Carolina told the principals in the case this summer that he was inclined to try to protect the deposits of the 255 people waiting to settle on units and the 300 unsecured creditors, as well as to work out a reorganization plan between ARS and FSLIC.

ARS President John Kruse said the company's assets total $58.9 million, including the partially built condo-hotel, the partially built ski facility, two swimming pools and the undeveloped land. The resort, when complete, was projected to cost $500 million and total 8,500 housing units, with a golf course and extensive base lodge, ice rink, shopping mall, pools and tennis and racketball courts.

The reorganization plan proposed by ARS would send little money back to FSLIC in the first years. Although FSLIC officials declined to comment on the case at this point, they had said earlier this year that they were anxious to sell the resort as soon as possible instead of allowing their funds to stay in the project.

The plan filed by ARS asks for several provisions from the bankruptcy court. The first is to allow the developer to get a $5 million priority loan secured against the property so the company can finish the work on the central building, ARS Vice President Leonard Jackson said.

The loan would be senior to FSLIC's lien, meaning that it would have to be paid off before FSLIC would be repaid if the project were sold at auction.

Jackson said that ARS would have to pave the roads, landscape the grounds and finish the central core of the lodge before it could go to settlement on the condo units in the building.

The plan also would require the court to lift FSLIC's lien and allow ARS to sell the units. ARS said that, if the court allowed it to sell the units, the company would be willing to release prospective purchasers from their contracts if they had lost confidence in the project.

Jackson said that the judge indicated he would be "more favorably disposed" to the ARS plan if the company could show that a large number of the 255 prospective buyers still are willing to purchase their units, even though some of them have waited as long as two years to go to settlement.

In a preliminary poll of the purchasers, 90 of the 162 responding said they probably would request a refund and withdraw their contracts. Only 46 said they would stay with the project, and only if the company could convince them that resolution of the dispute between FSLIC and the developer would protect the value of their units.

Jackson said that, if the company were allowed to sell the existing units, it then would pay 40 percent of the proceeds from the first $7.5 million in sales, or about $3 million, to FSLIC. (Not completely paying off a secured creditor -- in this case, FSLIC -- first is unusual in bankruptcy reorganizations, according to industry observers. No one involved is willing to speculate about how this facet of the plan might affect chances for its acceptance.) Forty percent would go toward paying off the priority $5 million loan and 20 percent would be kept for operating allowances and paying some of the unsecured creditors. The unsecured debts of the project total $4.6 million.

The company would use the next $7.5 million in proceeds to finish paying off the priority loan and to finance development of another triple chairlift and three more ski slopes. FSLIC would receive $11 million of the total $21 million worth of sales proceeds expected from the first three wings of the building -- the part that is completed -- Jackson said. From sales in the fourth and fifth wings in the main lodge, FSLIC would get another $1 million.

Jackson said the company also has proposed that it be allowed to develop 2,225 additional housing units on 600 acres. The units would be sold for an average of $100,000 apiece. FSLIC would get 3 percent of those gross sales proceeds, or about $6.7 million, in addition to the $12 million from the sale of units in the lodge.

"Our plan calls for paying everyone other than FSLIC 100 percent on the dollar of what they are owed over the next 10 to 20 years," Jackson said. "Our reason for not proposing full payment of the debt to FSLIC is that cash is not being generated now because FSLIC has put this lien on the project and, if anyone should sustain a loss, it should be FSLIC."

FSLIC officials would not comment on the case, although they did say they plan to file a response to the reorganization plan by the end of this month. The bankruptcy court will hold a hearing on the plan Sept. 26. Creditors are expected to vote on a final version Oct. 31.