Tuesday, April 06, 2010
Westland Files for Bankruptcy
By Scott Sandlin
Journal Staff Writer
Westland DevCo, a limited partnership between D.E. Shaw and SunCal Companies to develop a 55,000-acre parcel of land into a master-planned community west of Albuquerque, filed for Chapter 11 bankruptcy protection Monday to restructure its debt.
The company said in a statement that the filing, in U.S. bankruptcy court in Delaware, was considered necessary to preserve the value of its business as an ongoing concern and its assets, as well as to explore alternatives for restructuring loans "in a challenging real-estate market."
The company filing estimates assets at approximately $360 million and liabilities of $197 million.
SunCal Cos. bought the West Side land in 2007 for $250 million and began moving forward with plans for new industrial projects and retail development as well as homes, using the land as collateral for the project.
SunCal configures its operations nationally so each project is run by a separate limited liability company — in New Mexico, Westland Development Co., which later became Westland DevCo.
The LLCs can file for bankruptcy or default on their obligations without legally affecting the parent company.
Lender Barclays Capital Real Estate filed a foreclosure action against Westland DevCo in 2nd Judicial District Court in Albuquerque last December, and was seeking appointment of a receiver at a hearing Monday when attorneys notified the judge of the bankruptcy filing, which shifts action to a different legal venue.
Court pleadings filed by Barclays say lenders loaned $212 million, secured by the land, between December 2006 and July 2008. The loan had matured and Westland DevCo defaulted by failing to pay the balance, more than $188 million, as of December, Barclays said in court documents.
The Westland DevCo statement said the partnership had hoped that a restructuring of the loan terms with the lender syndicate could be accomplished to avoid the bankruptcy filing, but the parties reached an impasse.
The Chapter 11 applies solely to Westland Development.
The bankruptcy filing lists creditors with unsecured claims including law firms Jones Day in New York and Modrall Sperling Roehl in Albuquerque, accountant firm Deloitte & Touche, and architectural, landscaping, lobbying and public relations firms. The partnership has continued spending to preserve and enhance the value of the development, including payment of about $217,000 in real estate taxes; $134,000 on water and renewable energy development; and $110,000 on a long-range development plan, according to Westland's statement. It has also explored funding and permitting for a 247-acre solar farm and broadband services.
"This is a responsible course of action that will allow the development to reorganize and thereby continue operations," said David Soyka, Westland DevCo spokesman. "We are working to keep this project moving forward."