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In what’s becoming a familiar pattern during Southern Nevada’s recession, yet another shopping center development filed for bankruptcy protection Tuesday to thwart takeover attempts by a lender.
Eagle Crossroads Center LLC filed for Chapter 11 reorganization in U.S. Bankruptcy Court for Nevada – one day before a scheduled hearing in Clark County District Court in a lawsuit filed by Bank of America as trustee for debt securities issued by Morgan Stanley Capital I Inc.
Eagle Crossroads has a shopping center at 6464-6512 Decatur Blvd. in North Las Vegas, just north of the Las Vegas Beltway.
Bank of America sued the development’s owner July 11, charging defaults under a 2007 loan agreement in which it says $52 million is due.
"Borrower borrowed $52 million but is not paying it back," the bank charged in the lawsuit, adding income from the property is insufficient to satisfy the loan obligations.
A hearing on the bank’s motion for appointment of a receiver, who would run the property until it’s foreclosed on and sold, was scheduled for today.
The hearing likely will be canceled by the bankruptcy, though the lender can ask the bankruptcy court later for permission to proceed with the foreclosure should another solution not be worked out with the borrower.
The bankruptcy filing didn’t include detailed financial information, but suggested the shopping center is worth just $38 million – an "underwater" situation not unusual during the recession that has slashed commercial property valuations in the Las Vegas area.
In responding to the lawsuit seeking appointment of a receiver, attorneys for the shopping center said Bank of America had failed to disclose some basic facts about the case: Eagle Crossroads and B of A already have an agreement in which all rent generated by the property is going to a lockbox under B of A’s control.
"No rents are being collected by Eagle. Indeed, not only is B of A still collecting the rents from the property tenants from a lockbox, but B of A is then withholding operating expenses for the property," Eagle Crossroads' response said.
Attorneys for the lender fired back, saying in a court brief: "While it is true that plaintiff is collecting all rents, the amount of rent collected is heavily influenced by the negotiations undertaken by the borrower (specifically granting tenants relief from having to pay the full amount of rent due).
"There is a disconnect in the shopping center being 98 percent occupied and cash flow declining so significantly that borrower cannot fulfill its obligations under the loan documents," the bank’s filing said.
Tuesday’s bankruptcy filing was signed by Brian Good, president of shopping center general partner Hillcrest Eagle LLC.
On paper, at least, Eagle Crossroads Center LLC is based in Los Angeles.