Las Vegas home builder files for Chapter 11: Legacy Homes in dispute with lender

Grace Leong

Tuesday, March 6, 2001 | 11:37 a.m.

A home builder with five Las Vegas-area developments totaling 1,000 lots has filed for Chapter 11 bankruptcy protection to protect its assets from being foreclosed on by creditors.

Legacy Homes, doing business as Principle Centered Inc., and five of its subsidiaries filed for Chapter 11 on Friday to stay foreclosure proceedings by its largest lender, USA Commercial Mortgage Co.

USA earlier sued Principle, alleging it defaulted on loans. Principle says the amount in dispute is $12 million to $15 million.

Principle has assets of about $38 million and liabilities of $46 million, said company President Rolland Weddell.

The home builder, which has a Henderson office, said it won't lay off its 30 employees.

Three of the its projects are in North Las Vegas: American Destination II LLC, American Imagination LLC and American Harmony II LLC. The other two projects are American Enchantment II LLC in Henderson and American Inspiration LLC in the Green Valley area of Henderson.

"These loans, brokered by USA Commercial, are cross-collaterized against the five projects, meaning if one loan goes bad, then the other four loans also go into default," Weddell said.

"The loans are in default because USA failed to renew a loan for American Imagination in August 2000 that it had a contractual obligation to do. USA Commercial has filed notices of default since December against the five projects," Weddell said.

"We bought all the notes and deeds of trusts on the projects, but long after the fact, we paid USA cash for everything, USA wants an additional $1 million in exit fees or loan brokerage fees on loans that we had bought from it. That's illegal," he said.

USA Commercial officials could not be reached for comment on Weddell's claims.

USA Commercial is in other litigation over the same real estate. USA Commercial claims in one lawsuit that American Communities and Robert and Cheryl Porter -- who sold the projects to Principle -- falsified financial statements in order to obtain loans.

American Communities and the Porters could not be reached for comment on that allegation.