Inspirada, near Anthem in Henderson, was envisioned as a 13,500-home, 2,000-acre New Urbanist community where people could walk to parks, schools and a casino, but the housing slump has called into question the commitment of developers and buyers and perhaps lowered the value of some of the homes by about $100,000.
Monday, Feb. 14, 2011 | 11:46 a.m.
Sun Coverage
Inspirada
Sun Coverage
The homebuilder group developing Henderson's Inspirada planned community has appealed a court ruling putting their company, South Edge LLC, into Chapter 11 bankruptcy.
Attorneys on Monday filed appeal papers with U.S. District Judge Philip Pro in Las Vegas, who will preside over the appeal.
Bankruptcy Judge Bruce Markell in Las Vegas on Feb. 3 granted a petition filed by lenders seeking to involuntarily put the project into bankruptcy because of defaults and past-due loans totaling $328 million.
Because the recession slashed demand for new homes in the Las Vegas and Henderson areas, Inspirada homebuilders such as KB Home stopped buying land for home-building from their own partnership -- making it impossible for South Edge to cover loan payments.
South Edge didn't immediately spell out its legal arguments in the appeal.
During a hearing early this month in bankruptcy court, Markell noted the case is more about the dispute between the lenders and the homebuilders as South Edge has infrastructure development obligations.
"This is a significant and serious development that has been stopped probably for good business reasons -- but stopped, nonetheless, leaving approximately 600 homeowners ... plus the city of Henderson and many others in limbo," Markell said.
He noted that as the recession has reduced land values, the land backing the loans is now worth only about $50 million.
"I doubt given what I have heard, given what all the witnesses have testified to, both from the alleged debtor and from the petitioning creditors, that the petitioning creditors are going to come out being paid in full," Markell said.
He also found that infighting among the homebuilders that control South Edge "shows a certain ability to interpose a deadlock and then to force that as a negotiating strategy."
"I accept the petitioning creditors' arguments that what they need is an independent fiduciary running South Edge," Markell said in explaining why he ordered that a trustee be appointed to run South Edge.
Markell said that earlier arbitration proceedings involving the homebuilders' disputes among themselves "indicate that this is a debtor with if not deadlocked management, management that has a conflict in terms of exercising the assets which are available to it."
After the homebuilders stopped buying land in Inspirada to develop communities there — making it impossible for Inspirada to pay its debts — South Edge member Focus Property Group's Focus South Group LLC charged the homebuilders had wrongly shut down development of the project and took them to arbitration.
The arbitrators in July found the builders wrongly shut down the project and breached an agreement to buy land from the Inspirada development company and awarded Focus damages of $36.8 million. The homebuilders are appealing that award.
Development at Inspirada, planned for 8,500 homes, stalled in 2008. Only about 640 homes have been sold there.
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