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September 30, 2014

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bankruptcy court:

Lake Las Vegas can abandon golf course, judge says

Bankruptcy court hearing focuses on golf course, pump station

Image

Courtesy Lake Las Vegas

The Falls is one of three golf courses at Lake Las Vegas facing financial difficulties.

Beyond the Sun

Lake Las Vegas owners will be allowed to abandon one of the resort's three golf courses, a federal bankruptcy court judge decided today.

In a complex ruling, Judge Linda B. Riegle also ordered that the resort will maintain its rights to an incomplete pumping station that sits on course. That could allow the resort to recover some funds when the station is completed.

Some of the attorneys present questioned the order, but Riegle, who in December had delayed the case to give the parties time to come to an agreement, was firm.

"You asked me for a ruling," she said. "I gave it to you. You all had the opportunity to negotiate. … You all could have come to an agreement. You didn't. That's my ruling."

Riegle agreed with attorneys for Lake Las Vegas, who argued that The Falls golf course was losing money and its continued operation would hurt the resort's ability to emerge from Chapter 11 bankruptcy. Lake Las Vegas, which changed ownership last year and filed for bankruptcy in July, still owes more than $15 million on the course in addition to $6 million in liens filed against it, the attorneys said.

Riegle had hoped that Lake Las Vegas, its various creditors and golf course creditor Carmel Land and Cattle Company could work out a way to separate the pump station from the course, finish it for the future development that will depend on it and turn it over to Henderson for its operation.

Once the city accepts the station, it would pay between $4.6 million and $6.1 million out of the local improvement assessments it has been charging Lake Las Vegas residents for infrastructure development. But how much money the station would bring, as well as who would receive it, were both subjects of debate at the hearing.

Riegle had wanted Lake Las Vegas to keep the rights to that potential income to help it pay creditors, she said.

Estimates to complete the pump station varied between $280,000 and $400,000. But before it can be turned over to the city, more than $3 million in claims and liens against the pump station would have to be settled and released.

Attorneys said they tried to work out an agreement, but could not because of the complexity of the issues. Before separating the station onto its own parcel, they said they would have to survey the area to establish lot lines, adjust those lines, research every claim against the land, and settle those claims and liens that have been filed.

"It's been extremely difficult to solve any issue without solving every issue," said attorney Jeffrey Patterson, representing Lake Las Vegas. "When we try to solve one issue, it raises a number of other issues down the line."

Attorneys for Lake Las Vegas said it didn't make sense to drag the process out in the hope of squeezing some money out of the pump station when the resort is losing millions on the golf course. They added that the resort doesn't plan on developing the parcels tied to the pump station any time soon, because other parcels ready for development elsewhere in the course are more valuable.

Attorneys for pump station builder Stanley Consultants argued against abandonment, because it would wipe out the firm's claim on the pump station.

Attorney Janiece Marshall said abandoning the pumping station would also weaken the future stability of Lake Las Vegas.

"It is in the best interest of the estate, best interest of the citizens who have paid assessments, and the best interest of (Henderson) for this pump station to be completed and not abandoned," Marshall said.

Though Riegle's ruling will wipe out the liens on the pump station, she ordered Carmel to not do a foreclosure sale for 60 days, during which time she told Marshall to seek redress from state courts.

Jeremy Twitchell can be reached at 990-8928 or [email protected].

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