Creditor tries to foreclose on real estate company’s land

Friday, Oct. 23, 2009 | 12:40 p.m.

Leading Investments consents to Chapter 7 bankruptcy (7-30-09)
Investors want to examine Las Vegas real estate company’s books (5-26-09)

Leading Investments Inc.

A second creditor is seeking to foreclose on land held by Leading Investments Inc., a Las Vegas real estate development company that was forced into bankruptcy liquidation this year.

KPK Investors LLC of Everett, Wash., asked the U.S. Bankruptcy Court in Las Vegas this week for permission to foreclose on property in Bullhead City, Ariz., that had been proposed for development into a 68-home development called Rio Colorado Estates.

A Nov. 17 hearing was set on KPK's motion, which said KPK loaned Leading Investments $1.65 million in April 2006 and that Leading Investments stopped making payments on the note in March of this year and that $1.557 million was due as of Sept. 30.

KPK said Leading has no equity in the property and has failed to pay some $35,800 in taxes on the land parcel.

KPK submitted to the court a May e-mail from Leading executive Ernie Domanico to KPK official Kent Hanson.

"The land is not even worth the amount of your loan. ... It's a tragedy what has happened to this country. For those who were willing to work hard, employ people and develop projects, they took it in the shorts. Of course, many people think of developers as free loading flippers...," the e-mail said.

Robert Barnhart is Domanico's partner in Leading Investments.

Leading Investments on July 28 consented to the demands of certain creditors that it be placed under Chapter 7 bankruptcy supervision.

Investors filed an involuntary Chapter 7 liquidation case against Leading Investments in April and asked that the court allow them to examine its books and records.

Bank of Nevada then moved to foreclose on a Leading Investments office building, but its foreclosure efforts have been blocked by some of the investors who say the building may have equity for them to recover.

In court filings, the bank says an appraisal found the building is worth $3.29 million and that Leading owes $4.236 million on the note. The bank says Leading Investments stopped making payments on the loan in June 2008.

Wayne Jones, general manager of petitioning creditor Mortgage Syndication Network, has argued a February 2008 appraisal of the office building valued it at $7.6 million and that the Bank of Nevada appraisal of $3.29 million is "astonishingly low."

The 13,672-square-foot, two-story office building is at 10789 West Twain Ave.

In the petition against Leading Investments, investors said the company owns two pieces of real estate in the Las Vegas area that back loans that are in default: The 10789 W. Twain Ave. building in Summerlin, near the 215 Beltway and Town Center Drive; and land in the northwest Las Vegas Valley at Lone Mountain Road and Pioneer Way, west of U.S. 95.

Brian Holthus, an attorney representing the creditors and investors in the April involuntary petition, said Friday he's still looking into the financial affairs of Leading Investments on behalf of his clients.

Whether other creditors resist the foreclosure of the Bullhead City property depends on whether there's any equity for the creditors to assert claims to, he said.

Other creditors in the case include Cumorah Credit Union, which has filed claims of $3.099 million for a real estate loan and $49,000 for a Visa credit card account; and the Internal Revenue Service, claiming $7,534.

Discussion: 5 comments so far…

By wizardofOz

10/23/09 at 1:11 p.m.

Suggest removal

"...Wayne Jones, general manager of petitioning creditor Mortgage Syndication Network, has argued a February 2008 appraisal of the office building valued it at $7.6 million and that the Bank of Nevada appraisal of $3.29 million is "astonishingly low."..."

Maybe I can get these "puff artists" to appraise MY house, because mine is "astonishingly low", too.
By tvegas

10/23/09 at 3:24 p.m.

Suggest removal

I wouldn't buy that office building for half the low appraisal (I have been a real estate investor for 40 years).
By burnemandturnem

10/23/09 at 3:48 p.m.

Suggest removal

February of '08? May as well be another lifetime ago considering the collapse of commercial real estate in this town. I'm surprised it's worth even 3 million today!!
By maybevegas

10/23/09 at 4:12 p.m.

Suggest removal

Maybe Mr. Jones should take a drive through the SW part of town and he might find it "astonishing" how low the occupancy rate is with the overbuilding that has occurred!
By attorney2009lv

10/26/09 at 8:05 a.m.

Suggest removal

The real shame here is the innocent individuals who were duped into the investment schemes of Leading Investment's owners -- their house of cards will come falling down soon and will have major repercussions in the Las Vegas community - had nothing to do with the economy -- all to do with greed