Wednesday, April 1, 2009

Thodes Companies Files Chapter 11 Bankruptcy in Las Vegas

Developer James Rhodes on Tuesday night filed a petition for bankruptcy on behalf of many of his key businesses, including Rhodes Design and Development Corp., listing $100 million to $500 million in assets and liabilities in the same range.

The developer filed for bankruptcy under Chapter 11, which allows the companies to continue operating while their finances are restructured. Rhodes has been one of Las Vegas' most successful and controversial developers and homebuilders. He developed Rhodes Ranch in southwest Las Vegas and Tuscany Village in Henderson. He provoked the ire of environmentalists with his development of the Red Rock Country Club community.

Rhodes drew news coverage again when Erin Kenny, the former Clark County commissioner, disclosed that Rhodes paid her $200,000 a year for consulting as part of an agreement in which she pleaded guilty to federal corruption charges. Kenny was sentenced to 30 months in prison in connection with a bribery case involving former strip club owner Michael Galardi.
The Arizona Corporation Commission questioned Rhodes about his business relationship with Kenny when he sought to establish a water utility for a master-planned community proposed in Golden Valley between Kingman and Bullhead City.

The Arizona panel also grilled Rhodes over $148,000 in fines he paid after admitting he illegally funneled campaign contributions in 2002 through employees and employees' spouses to Sen. Harry Reid, and then County Commissioner Dario Herrera. Herrera also was convicted in connection with the bribery case.

The Rhodes Companies filed the bankruptcy petition but an attachment notes that 31 affiliated companies also are seeking protection under Chapter 11 bankruptcy.

They include Rhodes Ranch General Partnership, Rhodes Ranch Golf and Country Club, Tuscany Golf Country Club, Tuscany Acquisitions and three similarly named companies, Rhodes Realty, Rhodes Homes Arizona, Rhodes Arizona Properties, Tribes Holdings, Six Feathers Holdings and Bravo.

Rhodes filed a statement explaining that he believed "it is in the best interests of the company, its creditors" and others to file for Chapter 11.

The Sunstate Companies of Las Vegas is the largest unsecured creditor and is owed $201,000, followed by G.C. Wallace of Las Vegas, which is owed about the same amount. The developer estimated that between 5,000 and 10,000 creditors will have claims in the bankruptcy case.
He hired the law firm of Pachulski Stang Ziehl & Jones, which has offices in Los Angeles and other cities, but the petition was filed by Larson & Stephens of Las Vegas.

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