Bankrupt LV developer fighting First Security Bank over loan

Monday, May 8, 2000 | 11:38 a.m.

A District Court judge has delayed the foreclosure sale of a Las Vegas housing development critical to a local developer's bankruptcy proceeding.

A temporary restraining order was issued on the sale of property being developed as Rancho Classic at 2600 Vegas Drive. A hearing on whether to permanently block the sale is scheduled for Thursday.

The Horn Co., a Las Vegas developer that is a general partner in Rancho Classic, filed suit against First Security Bank of Nevada and United Title of Nevada to block the sale.

Rancho Classic had obtained an automatic stay of the scheduled May 31 sale from the U.S. Bankruptcy Court. But First Security, the largest unsecured creditor in the Rancho Classic filing, succeeded in overturning the automatic stay and the sale was then set for April 27.

District Court Judge Lee Gates then issued the temporary restraining order again delaying the sale.

The developer said the equity on the property, estimated at $940,000, is critical in Rancho Classic's attempt to reorganize in a Chapter 11 bankruptcy filing.

Both Rancho Classic and the Horn Co. have Chapter 11 filings in U.S. Bankruptcy Court in Las Vegas. A Chapter 11 bankruptcy gives a company protection from creditors while it undergoes a reorganization enabling it to pay its debts.

The Horn Co., which filed for bankruptcy Jan. 3, lists assets of $9.33 million and debts of $6.16 million. According to the filing, the developer owes Comstock Bank, Reno, $2.4 million and Gonzo Financial, Reno, $850,000. They are among the top unsecured asset holders.

First Security acquired Comstock last year.

Rancho Classic, which filed for bankruptcy Feb. 24, listed First Security as the largest unsecured creditor, $1.85 million, with other debts to Carrair Investment Corp., Corinda, Calif., $450,000, and the Horn Co., $250,000.