Judge gives early OK to Lake Las Vegas bankruptcy plan

By Amanda Finnegan

Published Monday, June 21, 2010 | 6:28 p.m.

Updated Wednesday, June 23, 2010 | 2:30 p.m.

A judge verbally approved Lake Las Vegas’ plan to emerge from Chapter 11 bankruptcy at a hearing Monday, the development’s parent company said today.

Sandra Sternberg, a spokeswoman for the Atalon Group, said the company expects to have written approval for the plan from Judge Linda Riegle by Friday. Sternberg said the development won’t emerge from bankruptcy for a few weeks, but Lake Las Vegas on Monday overcame a big hurdle in the process.

She said the Atalon Group was pleased with the progress, but said it was premature to provide other comment.

The Atalon Group acquired Lake Las Vegas from Transcontinental Corporation in January 2008 and filed for bankruptcy in July that year.

Under the proposed plan, the development's lenders, led by Credit Suisse Group AG, would see a portion of their loans to Lake Las Vegas converted into a controlling equity interest in the development.

The plan proposes that Lake Las Vegas would sell much of its land in the Phase I and II planning areas, while also focusing efforts on the long-term development of Phase III. Lake Las Vegas’ original plan called for more than 9,000 residential units, but only 1,700 have been built.

Phase III includes almost 600 developable acres and can accommodate up to 4,000 residential units. Lake Las Vegas owns more than 80 percent of the remaining developable land in that phase. Lake Las Vegas added the price for homes is also expected to be considerably less than the historical average up to this point.

The plan provides financing for the reorganized debtors to cover expenses and finances improvement district developments, including building a replacement water pump station and completing improvements on Lake Las Vegas Parkway.

Objections to the reorganization plan were filed by Transcontinental Corp. and Fort Worth, Texas-based Carmel Land & Cattle Co., which had invested in Lake Las Vegas before the bankruptcy. The city of Henderson also filed an objection to the plan last month.

"As part of the bankruptcy process, the city filed written objections to the proposal out of concern over potential impacts to the construction of infrastructure within the local improvement district at Lake Las Vegas. The approved plan and agreements with Lake Las Vegas ensure the stalled improvements will move forward. Residents will most likely see resumption of activity on many of those projects within the upcoming months," Henderson City Manager Mark Calhoun said in a statement released to the Sun.

Calhoun added that the city is optimistic about the future activity and financial security of the Lake Las Vegas community.

The 3,600-acre Lake Las Vegas, 17 miles southeast of the Las Vegas Strip, includes Loews Lake Las Vegas and the MonteLago Village Resort. The community’s only casino, Casino MonteLago, closed in March, and the Ritz-Carlton Lake Las Vegas closed last month. The development also includes three golf courses, two of which have closed since the development went into bankruptcy.