The owner of the stalled Park Highlands planned community in North Las Vegas has filed for bankruptcy protection a second time.
This time, however, there’s a plan for a quick auction of the 1,340 acres still controlled by the development company — with a bid on the table already for $15.2 million.
An affiliate of the Park Highlands development company has offered this "stalking horse bid" — making this plan similar to the one in which the owners of Station Casinos Inc. bought much of their own company out of bankruptcy with their own stalking horse bid.
The Park Highlands company, November 2005 Land Investors LLC, and two affiliates filed for Chapter 11 bankruptcy reorganization on Wednesday in U.S. Bankruptcy Court for Nevada.
This week’s filing came 19 months after November 2005’s first bankruptcy reorganization plan was approved in November 2009.
The first bankruptcy was filed in May 2009 as the worst recession in memory put a halt to the Park Highlands development plan involving 2,675 acres. Since then, some of the land has been sold, leaving 1,340 acres.
The company emerging from the 2009 bankruptcy was carrying $180 million in debt, Park Highlands said in this week’s new bankruptcy filing.
"Still laden with a significant debt load and under continued housing market stress, the reorganized November 2005 defaulted on interest payments within four months of emergence from Chapter 11. The owners of November 2005 stopped funding infrastructure improvements and service obligations in 2010. As a result, for most of 2010, the property sat idle with no development and no activity," the filing said.
In December, an affiliate of a Ross Perot company, Hillwood Communities of Dallas, acquired the Park Highlands parent company, November 2005 Land Investors.
Park Highlands’ development company previously was led by the Olympia Group, developer of the Southern Highlands community south of Las Vegas.
In this week’s bankruptcy filing, November 2005 said it was advised by its restructuring advisor, Odyssey Capital Group LLC, that a restructuring of the company — either in or out of court — is not possible given the depressed value of the land, opposition to any restructuring by lenders holding 49 percent of the $55 million in first lien debt and the threat of these lenders to file an involuntary bankruptcy petition against Park Highlands.
"Following significant investigation, due diligence and negotiation with various parties and lenders, the debtors in consultation with Odyssey determined that seeking bankruptcy protection under Chapter 11 of the Bankruptcy Code and selling substantially all of their assets pursuant to the Bankruptcy Code was in the best interests of all parties in-interest," this week’s bankruptcy filing said.
Park Highlands attorneys hope to gain bankruptcy court approval of the sale plan by Aug. 12.
A Hillwood affiliate, BOH Park Highlands NV L.P., has offered $15.2 million for the land, free and clear of liens, existing debt and other encumbrances. That’s the "stalking horse" bid that others will have to beat if they want to bid on the land.
The sales plan also calls for any buyer to assume Park Highlands’ development agreement with the City of North Las Vegas, which could involve a significant financial commitment for building infrastructure.
It’s unknown if any creditors will object to the sales plan, but objections wouldn’t be surprising given the losses faced by the holders of the $180 million in Park Highlands debt.
In April, an official at Hillwood Communities told VEGAS INC that the firm had approached North Las Vegas officials about reducing density and eliminating some development requirements so that development of the planned community would make economic sense.