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Monday, Sept. 21, 2009 | 3:07 p.m.
Related Documents (.pdf)
Related stories
- Council briefed on Lake Las Vegas bankruptcy (9-15-2009)
- Lake Las Vegas proposes bankruptcy plan (9-5-2009)
- Lender sued over Lake Las Vegas loans (9-3-2009)
- Lenders to foreclose on Lake Las Vegas’ last golf course (6-29-2009)
- Judge approves bankruptcy for Lake Las Vegas golf course (6-29-2009)
- Another golf course to close at struggling Lake Las Vegas (6-25-2009)
- Lenders seek control of Lake Las Vegas hotel (6-4-2009)
- Residents of bankrupt Lake Las Vegas face uncertainty (3-23-2009)
- Lake Las Vegas can abandon golf course, judge says (1-15-2009)
- Amid the decline, decadence for the feet (1-5-2009)
- Judge: Lake Las Vegas golf course should be shuttered (12-22-2008)
- Resort golf course’s fate spurs debate (12-16-2008)
- Never spoil a good party with talk of a recession (8-29-2008)
- Bridge over troubled water (5-24-2008)
Map of Lake Las Vegas Resort
Lake Las Vegas Resort
1600 Lake Las Vegas Pkway, Henderson
Disputes are heating up between the current and former owners of the Lake Las Vegas development as the project attempts to emerge from bankruptcy.
Attorneys for Lake Las Vegas, a group of creditors and a key lender filed court papers last week responding to a motion by the former owner, Transcontinental Properties Inc., that the massive bankruptcy case involving liabilities of $728 million be dismissed.
Transcontinental claims the bankruptcy case should be dismissed because it's a charade in which Credit Suisse Group AG is actually both the main creditor and main debtor.
In their Aug. 20 motion, attorneys for Santa Barbara, Calif.-based Transcontinental Properties Inc. and Transcontinental Corp. said Lake Las Vegas was "solidly solvent" through mid-2004 but that Credit Suisse later effectively took over Lake Las Vegas.
Transcontinental noted allegations that predatory-lending practices by Credit Suisse at Lake Las Vegas enabled Credit Suisse to take over the high-end golf course, resort and residential development in Henderson. Credit Suisse has denied the allegation of predatory lending.
Transcontinental said Credit Suisse loaned the development's owners $560 million in 2004.
A unique feature of the 2004 loan was that it refinanced $48 million in existing debt and allowed the Lake Las Vegas developers to earn a return on their hundreds of millions of dollars in equity investments, Transcontinental said.
But encumbered with more debt and facing a deteriorating economy, Transcontinental said Lake Las Vegas could not make a loan payment in September 2007 and Credit Suisse then took control of the project.
Since filing for bankruptcy in 2008, Lake Las Vegas has lost more than $65 million -- losses covered by Credit Suisse, Transcontinental complained.
"The debtors are kept alive solely by their senior lender, who also happens to be, for all practical purposes, the debtors themselves," Transcontinental argued in its motion. "Credit Suisse as the senior creditor could have achieved the same result for itself as the owner and these Chapter 11 cases were entirely unnecessary."
"These cases present the novel circumstance of a lender creating an entity to control the debtors to give it the sham appearance of independence," complained Transcontinental, which charged the bankruptcy case was really filed so Credit Suisse could resolve disputes between itself and other lenders.
The bankruptcy case has accumulated $6.5 million in professional fee expenses -- money that otherwise could have been used to pay the bills of unsecured creditors, Transcontinental complained.
Transcontinental said the bankruptcy cases also serve no purpose since there is no equity to reorganize -- it said the value of Lake at Las Vegas Joint Venture LLC's real estate is estimated at $147 million vs. the secured debt to Credit Suisse totaling more than $696 million. Bankruptcy could have been avoided if Credit Suisse had simply foreclosed on the property, Transcontinental's attorneys said.
But attorneys for Lake Las Vegas, Credit Suisse, Cayman Islands Branch and the case's Unsecured Creditors Committee fired back at Transcontinental last week, with Lake Las Vegas and the Unsecured Creditors questioning Transcontinental's motive in seeking dismissal of the case.
They said Transcontinental is actually hoping to block threatened post-bankruptcy litigation against the former owners of Lake Las Vegas.
Attorneys for Lake at Las Vegas Joint Venture LLC and its affiliates in the Chapter 11 cases said Transcontinental is acting not as an unsecured creditor, but as, or on behalf of, the defendant in a pending bankruptcy court lawsuit over infrastructure funding development disputes.
They said Transcontinental is also acting as a likely defendant "in certain anticipated post-confirmation litigation against the debtors' former insiders, including litigation to recover over $400 million in transfers from the debtors to the debtors' former equity holders."
"Transcontinental's goal in bringing the motion is not to make it easier for general unsecured creditors to obtain payment from the debtors. General unsecured creditors stand to receive absolutely nothing if the cases are dismissed," Lake at Las Vegas attorneys said. "Rather, Transcontinental's goal is obstructionist. Transcontinental seeks to make it as difficult for the debtors as possible to bring causes of action against Transcontinental and the debtors' other former equity holders and insiders.
"Transcontinental's real goal in seeking the dismissal of the cases is to force the debtors into a freefall liquidation, where the debtors will lack the ability to cover the costs of pursuing litigation and where the debtors will lose potential witnesses and documents that would otherwise be used in that litigation," Lake at Las Vegas said in its filing.
An Oct. 2 hearing is set on the motion by Transcontinental that the cases be dismissed. Lake at Las Vegas Joint Venture, in the meantime, is seeking approval during hearings Oct. 15 and Dec. 15 for its plan to emerge from bankruptcy.
So we bought in Dec. 2007 AND NEVER ONCE were told that Credit Suisse became the new owner. ISnt that a serious breach ? Never received an email, letter in mail or any other notification. If someone thinks this is wrong and wants to represent us - let me know.
BUT we do love it here and know that the value will never return, we just want to have the life style in our aging years to enjoy...
artswanson, I think you're being a little dramatic about the whole place shutting down. Nowhere have I read that the water supply will be interrupted. And it's 3 golf courses closed. Maybe they can turn them into farmland, with little goats and sheep dogs running around. With Bouvier and his crooked stick standing there, taking in the beautiful views. Ah, life is good at LLV...
Honestly people, if you are going to have an opinion (read:comment), learn about your subject matter. What a bunch of losers.
artswanson: There is no danger of the lake drying up. It has water rights with the federal government due to Carlton Adair's land swap way back when. look it up.
retiredyoungster: llv is a good investment. everyone else on these forums is just envious. the haves and the have-nots.
LLV was a scam from the start. It never would have been developed if it hadn't been for the Bass (of TX oil fame)family's muscle with their private D.C. connection, then House Speaker and infamous crook, Jim Wright - who not so curiously resigned under pressure just after final approvals were given for the project. Frankly, the project has always reaked with broken promises, back room deals fueled by the aravice of the Transcontinental developer and the rubber-stamp approval of the Henderson city council, desparate for some respect from a high-end development.
There is no danger of the lake drying up. It has water rights with the federal government due to Carlton Adair's land swap way back when. look it up
GAK
If push comes to shove, that water may be needed for the rest of Las VSegas. If Lake Mead is at dangerously low levels, why should the water at LLV be so precious and important? BOTH are man made bodies of water so there is no guarantee that they wll be around forever.
Also - it seems that you are a property owner and/or investor at LLV. No one is disputing that it COULD be a good investment purchasing property there, just like it COULD be a good investment buying property anywhere in the Valley. But please do not call those commenting "a bunch of losers". Better than beinga "know it all" like yourself.
Retiredyoungster has a good attitude and isn't living the "Bouvier Dream" about living at LLV
Retired --
I'm sorry for your equity woes; most property owners in LLV (and Las Vegas for that matter) can feel your pain. You will likely not find anyone honest who wants to represent you in your accusations because of a few material problems:
1) You purchased in December 2007. Credit Suisse foreclosed in January 2008. It was not public record that TransContinental was being foreclosed upon until it actually happened (you can't call a duck a duck until it's a duck).
A good buyer's agent may have known about the possibility of CS's foreclosure, and may have informed you that foreclosure could be a possibility. However, prior to the actual foreclosure date, it would have been conjecture. And in real estate, an agent can get into hot water for disclosing something that is not factual since it can be perceived as "steering" a client away from a particular area. The foreclosure may have changed your opinion about purchasing in LLV, but contemplate this hypothetical: had you heard about the FC prior to your purchase and elected not to purchase at LLV, and then the community had not foreclosed, you would now have a whole different beef.
2) Wherever you purchased (completed or under-construction community), the seller/listing agent/builder are not required to provide any information about the area outside of their owned property other than a zoning (+ gaming for new homes) map. The zoning map discloses the surrounding area's current zoning classifications, but not current owners of the dirt/projects.
3) Virtually nobody knew of the foreclosure proceedings at that point. Of course, TransContinental's "suits" knew about it, as did CS's assigned ones. But, other than that, it was not public knowledge. So, who do you think should have told you?
Art --
You are way off. CC&Rs are "Covenants, Conditions, and Restrictions" and governance has nothing to do with the owner of a community. The CC&Rs in LLV are identical (with some normal amendments/updates) to those from 2007, and don't need to be changed since they only address the actions and procedures of stakeholders, not who the stakeholders are. And, foreclosure is not viewed as an elective action. On paper, you cannot force a developer to keep paying its bills if it has no money (I'm not even going to get into what TC did with the cash acquired in the DIP financing that begot this whole hot mess) and can prove insolvency. Judge Reigle can sort all that out, but it has absolutely zero to do with CC&Rs.
Second, there is no RE disclosure about the owner of property(ies) surrounding that which is owned by the seller in a transaction. The reason for this is that the owner of a property cannot control who owns the property adjacent (except in a co-op, which to my knowledge, do not exist in SoNevada), and cannot be expected to be accountable for the ownership of nearby properties.
I'm not even going to rebut your comment about LLV "heading for total shut down" since it is completely laughable. You obviously have no knowledge about the area.
Munch --
Again"I hand it to you for trying to sound smart (er, "informed"). But, you fall short, yet again.
OF COURSE there is no guarantee that the water will be around forever. If, rather when, the planet goes through another ice age, LLV and Lake Mead will be no more"along with billions of other acres' worth of water projects throughout the globe. The point is, LLV will be around long after you're gone and long after I'm gone.
And, Mr. Know-It-All yourself, what is so wrong with living the "Bouvier Dream" in LLV? Since when should it be looked down-upon to be happy, pay your bills, and be optimistic about the future? Stop being such a transparent bitter pessimist.
Don't worry. Soon the Obama-led government will take it all over under a new "Lake Czar" and turn it into the nicest homeless camp/ACORN recruitment center you have ever seen. A fantastic example of redistribution of wealth.....
First I want to compliment BLONDEinGV, relating to the duty to disclose re: the Lake Las Vegas developer losing the project to Credit Suisse. You are right on the money on your first comment. I distinctly remember the story in one of the Las Vegas newspapers, in early January 2008, saying that the developer had surrendered the property to some company with a jibberish name. I forget how I figured it out, but I instinctively knew it was an "assignment in lieu of foreclosure", meaning that the lender, Credit Suisse, took an assignment of the ownership interests in the developer because the developer wasn't able to refinance the loans by a deadline set by Credit Suisse.
As to that "assignment in lieu of foreclosure" I saw it buried in the bankruptcy file, as an attachment to the Declaration of a Credit Suisse bank officer, during the early stages of the bankruptcy case. The funny thing was that the "assignment in lieu of foreclosure" he attached to his Declaration was signed by the Transcontinental people, but the name of the assignee wasn't filled in. That's an incredible strong arm tactic for a lender, which I never even thought about trying when I was a commercial mortgage lender's lawyer many moons ago, before I retired.
As a business or property owner, can you imagine handing over a piece of paper to your lender, saying "Here's the ownership" and not even filling in the name of the party acquiring your business?
If I am losing you Lake Las Vegans, here, sorry. You can look at all of the Bankruptcy Court documents for free by going to this website:
http://www.kccllc.net/llv
After clicking on the agreement to be bound by the website provider's nonsense, you will see the Lake at Las Vegas bankruptcy page. All of the key court documents are under the "Court Documents" tab on the left side of the page. Other interesting reading, though not earth shattering, is under the Schedules & SOFA (Statements of Financial Affairs) tab.
Usually, the transcripts of the Bankruptcy Court hearings are not posted on that website, however one time one was. From that transcript, it was very clear to me that Bankruptcy Judge Riegle is very smart and that she had figured out, right away, that the bankrupt entities were, in reality, straw men for Credit Suisse.
Also compliments to Steve Green on a good article. An important someone else thought so too: I actually first saw the article by way of a link from the Wall Street Journal's "Daily Docket", which talks about sophisticated bankruptcy cases.
On the substance of Green's article, it is important to note that for more than 35 years, mortgage lender's and bankruptcy lawyers on big commercial foreclosure properties have been theorizing that the best way to insulate lender clients from all types of liability, upon foreclosure or the acceptance of a deed in lieu of foreclosure, is to park title to the property in a subsidiary controlled by the lender.
Back in the old days, properties would be foreclosed with the successful bidder being the mortgage lender's subsidiary. The foreclosure buyer would then assert the foreclosure had wiped out all of the mechanics liens, leases, and second mortgages on the property. The lawyers for the mechanics lien claimants would be angry as a swarm of Africanized Bees, and raise cane about a "fraud on the courts". Some times they would win, and sometimes they would lose.
Later, Federal bank regulations wouldn't let banks easily set up those property holding subsidiaries anymore, so big commercial properties were foreclosed directly into the names of banks, S&Ls, and the FDIC.
In 2007, Credit Suisse's sophisticated lawyers set up the structure of Credit Suisse's take over of the LLV property in an approach just like the old days...the bank subsidiary acquiring ownership. But they got even more sophisticated, by taking over the ownership of the developer itself, not the developer's real estate. Frankly, I was surprised Transcontinental's and the Bass' lawyers went for it, because they are at the tip top of the heap in terms of sophistication. Maybe Credit Suisse had them over a barrel.
So, as I said above, in the first week of January 2008, some entities with jibberish names took over ownership of the Lake Las Vegas developer's entities.
Then, being even more clever, the jibberish-named developer entities hired, for their bankruptcies, a lead lawyer who was/is a bankruptcy law professor at UCLA.
The first day bankruptcy court filings breathed not a word about who actually was the ultimate owner of these Chapter 11 debtors. A company called Atalon, run by a sophisticated CPA from Los Angeles named Fred Chin, was in the driver's seat for the jibberish named debtor/developers.
The theory of the bankruptcy filing, and subsequent Chapter 11 Plan, is to use the bankruptcy judge's power as a hammer to make all the claims which would trouble a foreclosing mortgage lender go away: Mechanics liens, breached contracts for road construction or with the City, angry HOAs, and angry unsecured creditors who are service providers or subcontractors who messed up their mechanics lien claims.
I make no prediction who will win the battle which Steve Green describes in his article. However, the outcome of the battle will either vindicate or discredit the theories of "how to stiff everyone but the first mortgage lender" which have been discussed, at length, in real estate and bankruptcy lawyers forums for the last 35 years.
One last point, the water in Lake Las Vegas. From the bankruptcy court files, it's unclear who actually owns the "water rights" which allow the lake to be refilled. That is a very important question for the Lake Las Vegas homeowners to find a definitive answer to.
If I lived in Lake Las Vegas, I sure wouldn't want those water rights to be owned by anyone but the LLV master property owners association.
The bottom line, however, is that whoever owns those water rights, in a real drought super-emergency, the Las Vegas Valley Water District or Southern Nevada Water Authority could exercise a power of eminent domain to take the water rights away, pay fair market value for them, and use them for domestic drinking water in Clark County. Last time I checked, while the water agencies might have to pay through the nose for those water rights, there is no defense to the eminent domain proceeding which would actually take them.
Not for the LLV community to be singled out as troubled, I think "The Lakes" or any other project in the County with a big water feature is subject to the same risk.
BLONDEinGV
LOLOL Got me, didn't ya'? I understood everything you said about the CC&R's and then some. I'm not as ill-informed as I pretend to be. It's fun getting people like you all riled up!!
By the way, a regular poster on this comment board keeps saying that the City of Henderson invested $33 Million in the Lake Las Vegas project.
Does that mean $33 Million cash out of pocket, never to be seen again?
Or does it mean issuing $33 Million in infrastructure bonds which the people in Lake Las Vegas will pay for something close to eternity?
Option #2 Cynical. And they don't think they'll lose a dime.
It works like this: The developer builds the infrastructure and the city sells bonds to pay for it. The bonds are then paid off gradually over a decade or two, as the developer collects money from people who move into the community.
At the moment, Lake Las Vegas is delinquent on more than $2.2 million in improvement district payments to the city. The combined payoff amount for bonds associated with the three districts is about $33.1 million.
Ultimately, though, the bonds are secured against property at Lake Las Vegas, Hughes said. "The city is never on the hook for a dime."
And I can fly by flapping my ears.
See:
http://www.lvrj.com/news/26219079.html
Gosh, so many lengthy comments here, I don't even know what to, or if I should say anything?!? Not!?!?
A big thanks again for BlondeinGV for the (as usual) "factual information" for us all to review. As well as for sticking up for Bouvier's charmed balcony view. (I just adore a penthouse view, like Zsa Zsa) I gotta say, I'm surprised that NedNougat aka BDover, didn't hop on the LLV shutting-down bandwagon? Hmmm... maybe we've made some headway here.
Although, IF the courses were turned into farmland, (PS: still being watered and no powerlines) LLV could well be on the verge of the next greatest thing...The Vineyards at LLV. A winery! So, the green rolling hills would be JUST like Tuscany with the faint sounds of goats and cow bells in the distance.(thanks for always reeling me back in NedNougat/Bdover)
But, the only winners in this whole mess are the attorneys involved. Not that I want to strike up another nerve, but $6.5 million in fees? Now that is something to be angry about.
I didn't read all of the lengthy posts here, I think it is important to bring up the point that the bankrupt Lake Las Vegas development is not the same as Montelago Village or any of the individual associations within LLV including the LLV master Assoc. They are not part of this bankruptcy, which I understand is related mostly to the undeveloped properties. (is that correct?)
LLV Village is a very happening place right now! Check out the www.LakeLasVegasEvents.com website and see everything going on. The new marketing firm is doing an excellent job promoting and bringing people there. FAR from shutting down. When I was there a few weeks ago, there was an hour wait on a Saturday night for a table at Sonrisa. (even NedNougat/Bdover will tell you it was busy)
On a very bright side and tad off-topic, what about all the jobs at MGM being offered?!?!? That has to be a nice shot in the arm for the unemployed who may behind on their LLV house payment? Could be one less foreclosure there. (so I circled back on topic)
Art, Art, Art, my looney counterpart. Your conspiracy rant gave me quite the chuckle. Are the black choppers circling up above again?
You are correct that the developer used a "sky-is-falling" tactic to raze through approval for the $127M. However, multiple Atalon execs (most recently Jim Coyne, Atalon Principal) subsequently revealed that their strategy was not apropos, but was used as a means to justify the ends in various press releases/meetings. So, out of the $127M obtained, $3M was spent to repair the pipes installed to direct natural runoff at Duck Creek (LV Wash) into Lake Mead. And, those who were mis- or under-informed failed to understand that the pipes require preventive maintenance every 10 or so years, the prior occurrence being 1997. So, magically (!), they require repairs in 2008. And, it will need to be done again in -- say it with me -- 2018-2019, so don't be surprised then, my little friend.
The best part is, these 2 pipes have absolutely nothing to do with the lake's water SUPPLY (if confused, re-read the paragraph above). Neither of these pipes replenishes water into the lake; they are water diversion pipes.
Your argument about the scarcity of the valley's water supply is a little out of context. If the valley's drinkable water supply is at high-risk, we will all face much bigger problems than Lake Las Vegas' water level. What if the "big quake" hits in 2012 and sends half of CA into the wild blue yonder? What if the bees completely disappear and leave the US food supply emaciated? These are all very real possibilities. Probabilities? Hardly. Yes, LV will have to purchase water from other sources & continue to conserve into the future with more and more residents. But, the beauty of Lake Las Vegas is that it doesn't need to be fresh water, if that must be done. Worst-case scenario, it can be a big swimming pool, with chlorine and all. Sure, no fish/fishing, but the view is still phenomenal and can be found nowhere else in the Las Vegas area.
You also underestimate the casinos' influence in all of this. Sure, they're a little injured right now, but you can't possibly be so naive to think that they will let a little hydration put them out of business? According to you, "This state is corrupt from the Govenor'z Office thru every Board or Commission." I'm certain you include the state's biggest businesses in that blanket-statement. They'll make a deal to get water, and the politicians will require that they take care of constituents to ensure reelection. Sounds like a win-win to this Las Vegas native!
Your comment sums you up quite nicely: "LLV lake is a freakin lawn and garden ornament." Myopic doesn't even begin to describe that way of thinking.
Munch -
I'm always happy to help out a fellow truth-seeker!
So glad to see you're willing to elevate the discussion. Suuure you're smarter - ahem, "better-informed" - than your posts let-on (wink, wink!).
Mwah!
Bouvier is like a little mouse sneaking inside your walls. You know he's there somewhere, but you can't do anything about it.
But we like Bouvier. He said he was going to leave our walls, but when we leave some bait, out he comes again. Nice to hear from you again, B. See you at Monte Lago sometime. Look for the baseball cap.
To bdover:
You said "It works like this: The developer builds the infrastructure and the city sells bonds to pay for it. The bonds are then paid off gradually over a decade or two, as the developer collects money from people who move into the community.
At the moment, Lake Las Vegas is delinquent on more than $2.2 million in improvement district payments to the city. The combined payoff amount for bonds associated with the three districts is about $33.1 million.
Ultimately, though, the bonds are secured against property at Lake Las Vegas, Hughes said. "The city is never on the hook for a dime."
One important question is whether Henderson's City Attorney made sure to file a claim in the LLV bankruptcy to recover the unpaid money, and to enforce all of the other contractual obligations which LLV has to the City. If the City Attorney didn't do that, she's either crooked or stupide. I am continuously seeing City Attorneys and County Attorneys throughout the west intentionally fail to file claims in develper Chapter 11 bankruptcies, because the cities or counties don't want to hurt their friend the developer.
I thought this City Attorney was leaving the job in Henderson. Did something change?
Cynical, this reply was a copy of part of an article from Aug 2, 2008. If you click on the link I provided, you'll see that you made some comments below this article, too.
http://www.lvrj.com/news/26219079.html
I believe that Ms. Hughes did bail out of the city. A lot of the rats are leaving the ship with the Mayor off to Stations. Leaving a pile of crud for the new employees. "What, me worry?"
GAK,...thanks..we think so...