Archive for the 'Bankruptcy' Category

The developer of the planned community development project in Pierce County, Washington has filed a Chapter 11 bankruptcy in an effort to avoid bank foreclosure sales. The Cascadia planned community, touted as one of the largest development projects in the county with 18 years of planning and building, is the latest victim of the current economic crisis that has been sweeping across the country for several years now.

Cascadia Project LLC, the developer of the 5,000 acre master-planned community, has filed a Chapter 11 bankruptcy in order to stop HomeStreet Bank from placing the property on bank foreclosures sales scheduled to be held at the County-City Building in Tacoma.

According to HomeStreet, Cascadia has defaulted on its two loans amounting to $72.9 million plus interest and fees. The bank said that one loan was due in February while the other one was due in July.

John Ladenburg, chief operating officer of Cascadia, said that the company is not bankrupt, adding that it has assets that are worth more than its outstanding loan with HomeStreet. The company likens itself to General Motors, expecting to be back on its feet within six months if it can restructure its debt.

Industry experts said that Cascadia has spent over $114 million on the planned community, more than the land value. They said that the company has received interest from two national corporations that will work on office and housing park projects. Additionally, the company expects to earn more revenue from other business ventures to keep its operation going.

Industry experts said that Cascadia is not losing any money and that it aims to continue to do business. However, they agree that it is too early to tell if the developer would be able to come out from the bankruptcy reorganization and continue the work on the development project.

Under the plan, Cascadia is targeted to be the largest master-planned community in Washington. It includes about 6,500 houses, 626-acre commercial space, three golf courses, a hotel and seven schools.

Meanwhile, Cascadia has a current debt of $200,000 to the city of Tacoma. It also agreed to spend $750,000 to redesign the Highway 410 and Sumner-Buckley Highway intersection.

Industry experts said that the worst scenario that could be expected from the case is that the judge would reject Cascadia’s reorganization plan and allow HomeStreet to go on with the bank foreclosures sales.

There is a big possibility that the bankruptcy case involving the $100-million golf and residential property located in southeast of Yakima, Washington would be dismissed, unless something changes in the coming months.

In the event that the bankruptcy case would be dismissed, the wine-themed destination development of Vineyards Resort would become a foreclosed bank owned property.

Attorney Ford Elsaesser, who represented the Vineyard Property LLC which plans the development of the property into a wine-themed destination, said during a court hearing that backers of the company have not yet develop a reorganization plan that will lead to the development of the project that will satisfy a Milwaukee, Wisconsin-based hedge fund company which is the major creditor of Vineyards Resort.

At the hearing, Elsaesser told Judge Frank Kurtz that an order dismissing the bankruptcy case of Vineyards Resort will take effect on September 4.

However, Elsaesser said that there are some events that would make the dismissal of the bankruptcy case not on anyone’s interest. In case a dismissal will not happen, Kurtz has scheduled the hearing for a possible dismissal on September 9.

Stark Onshore Master Holding, the Vineyards Resort creditor, has sought the dismissal of the bankruptcy case. If the company’s request would be granted, it is free to pursue with its planned foreclosure on Vineyards Resort.

Stark Onshore Master has been trying to collect on the almost $12.9 million loan taken out by Vineyard Property in 2006. According to the company, its interest in the 500-acre Vineyards Resort is in jeopardy, adding that property developers have no ability to finish the project.

Stark Onshore Master has sought judgment against five loan guarantors before the Yakima County Superior Court. The loan guarantors include Ellensburg-based Gary Scott, Yakima builder Craig Schultz, Colorado resort development firm owners Daniel Fitchett and Rich Barnes and Montana resident Lee Burrington.

Developers of Vineyards Resort plan to construct a golf and residential development project featuring over 500 houses, a hotel retail center and a golf course.

In a separate news, Vineyards Resort has settled with Dincom Inc. which it hired in 2008 to help it obtain financing.

According to court records, Vineyards Resort is seeking a refund of $3.2 million from initial buyers of lots in the development project as fee in the event that Dincom obtain about $80 million to finish the first phase of the project.

The absence of any funding forced Vineyards Resort to file for bankruptcy because of its failure to pay loans taken out from Stark Onshore Master.

The House of Representatives has passed a bill supported by President Barack Obama aimed at reducing the number of foreclosure homes and stabilizing the housing market.

The bill would authorize bankruptcy judges to modify loans by reducing mortgage payments for owners of foreclosure homes. It is currently in the Senate for consideration.

Last February 18, Obama unveiled the Homeowner Affordability and Stability Plan as part of his $275 billion anti-foreclosure homes program. The $75 billion plan is designed to help more than 9 million distressed owners of foreclosure homes.

However, not all owners of foreclosure homes would be eligible for assistance under the plan. The revised bankruptcy measure is an added option for distressed homeowners who want to save their properties from foreclosure.

The number of foreclosure homes and pre-foreclosure filings in January of this year showed some improvement with nationwide figures of foreclosures dropping by 25.7 percent to 72,694 from 97,841 the previous month.

Pre-foreclosure filings in January dropped by 12 percent to 166,860 from 190,467 the previous month.

The decline in the number of repossessed homes in January 2009 was noticeably evident in Arizona, California, Florida and Texas. California foreclosures dropped to 14,351 from 20,952 the previous month. Florida foreclosures declined to 10,007, 5,367 in Texas and 5,250 in Arizona.

Meanwhile, pre-foreclosure filings in Florida dropped to 43,070 while California slide to 33,008 from 41,710.

However, despite some improvements in foreclosure figures, the decline barely made a dent on the foreclosure crisis as more and more homeowners are starting to feel the impact of the recession.

Lionel Ouelette of the advocacy group CHANGER pointed out that the measure, which would authorize bankruptcy judges to modify loans if mortgage servicers failed to come up with affordable terms for distressed homeowners, would be a great help to some homeowners.

The mortgage industry opposed the revised bankruptcy law and has lobbied against its enactment. The industry argued that the revised law could reward homeowners who borrowed irresponsibly and may lead to higher interest rates and fees.

It also pointed out that there is no way to determine how much is the cost involved in implementing the law to help troubled owners of distressed properties.

Some distressed homeowners are willing to consider the measure as their last hope to save their properties from foreclosures.

A good question to be asked by people nowadays in this economic recession is why the Bankruptcy Court is not permitted to be one of the solutions to the foreclosure crisis?

Senators came up with another foreclosure relief in the form of a bankruptcy fix. It hopes to help the bankrupt modify their delinquent loans under court protection. But there seems to be a dispute whether it should be put into a bill with the fear of Republicans delaying or even rejecting the plan.

Efforts to add a stipulation in the economic stimulus bill supported by congressional Democrats that would permit bankruptcy judges to minimize mortgages as a possible solution to the foreclosure problem is being resisted by President-elect Obama and his advisers.

A U.S. House bill that would authorize bankruptcy judges to modify mortgage terms is not a good solution to the foreclosure problem, according to Glenn Boyd, top securities strategist of New York City-based Barclays Capital.

As foreclosure filings soared to about 2.2 million last year, personal bankruptcy filings also soared from 801,840 million in 2007 to 1.06 million in 2008, based on data released by the American Bankruptcy Institute.

For homeowners facing foreclosure, filing for bankruptcy is one of the options that can be explored. But based on the assessment of the Mortgage Bankers Association, choosing to do might have a significant impact on lending in the long run.