Bank Foreclosure Sales Averted by Bankruptcy

by Peter Vernon on Bankruptcy

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.