Friday, November 21, 2008

Land Resource LLC Bankruptcy - Another Southeast Builder Files Bankruptcy

Land Resource LLC, a southeastern U.S. developer, has filed for Chapter 11 bankruptcy earlier this week. Land Resource LLC showed liabilities of over $200 million and assets valued at only about half that.

"The banks stopped making loans to our customers," Ward said in an e-mail. "It just doesn't seem fair that the banks can put us into bankruptcy because of their failure to lend and then get a federal bailout, but then chase me personally and ruin a very good company and put 250 people out of work and affect thousands of property owners and leave them with uncompleted lots."

Ward, who is 60, said he will start over.

The company's assets include 128 unsold lots in Cumberland Harbour in St. Marys, where the largest marina complex on the Georgia coast has been proposed. According to Land Resource, 936 lots have been sold. They asked from $150,000 to $750,000 for lots.

In July, Land Resources Companies of Orlando, Fla., parent company of Roaring River, a proposed 4,300-acre, master-planned community in Fayette County next to the New River Gorge National River, closed its Fayetteville office and laid off all of that office’s employees.Friday, the company announced it and 34 of its affiliates and subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code.“I am presuming this does affect the Roaring River project and its lot owners,” Fayette County Commissioner Matt Wender said.

Land Resources officials cited a combination of the declining economy, the credit freeze that is currently gripping the U.S. and a challenging real estate market.“We deeply regret the impact the Chapter 11 filing will have on property owners, vendors and employees,” Land Resource Chairman and CEO J. Robert Ward said. “We remain mindful of our customers whose home sites and communities have not yet been completed.”Ward said that through the Chapter 11 process the company will identify the best means of maximizing recoveries for all creditor constituencies.“Including our customers and employees,” he said.

“As part of this process, we will explore the sale of all the company’s assets to a well capitalized and well positioned purchaser.”Wender says he has always had mixed feeling about the proposed housing development.“I have always been concerned with the encroachment to the rim of the gorge, but the part of the housing development not visible I always thought of as being beneficial to the county,” he said.Approximately 80 lots have been sold as part of the housing development.“I’m very concerned about the lot owners who purchased lots, but can’t build on them,” Wender said.In July, a groundbreaking ceremony for water and sewer services was scheduled, then canceled.“Without that infrastructure, the lot owners can’t obtain building permits to build on their lots,” he explained.

“Now, it appears that they can’t get their money back, either. Those are the people I feel bad for in all of this.”Wender added he was surprised to learn that Land Resources had no escrow or bond funds to guarantee the water and sewer infrastructure being completed.“I’m concerned the lot owners may be in a difficult situation,” he said.Land Resources develops upscale residential resort communities throughout the Southeast and West Virginia.“The sudden and steep economic downturn has significantly impacted Land Resources in each of the markets where the company operates,” Ward said.“Home site sales have also declined dramatically due in large part to the extremely limited availability of credit.

Many well qualified buyers are finding it difficult to secure financing for a second home.” In order to facilitate an orderly negotiation process with its creditors and facilitate a structured sale of the enterprise or its assets, the company filed its Chapter 11 case in U.S. Bankruptcy Court for the Middle District of Florida in Orlando, according to Ward. “Purchasers of Land Resources’ assets may elect to fulfill the developer’s obligations, including those related to funding homeowner associations,” he explained.

“All transactions will be subject to bankruptcy court approval.”Ward said as news regarding the bankruptcy filing becomes available, the company will inform property owners and other stakeholders by posting information on its Web site, www.landresource.com.”The company has also established a “Frequently Asked Questions” section on its Web site as well, Ward added.

1 comment:

Terry Molnar said...

Land Resource Auction was held January 21, 2009 in Orlando. I spent quite a bit of time combing through all the court documents and created an article for our blog. You can read a summary of the case and the results on www.southernwayoflife.com. Click on the "Land Resource" category.
It is a real shame how this operated. Hundreds of families have had their dreams put on hold all for greed.
Regards
Terry Molnar