Exclusive Desert Resort Seeks Bankruptcy Shelter From Foreclosure

Posted in Foreclosure, July 4th, 2007 |

The owner of an alpha desert hideaway, in West Texas, meant exclusively for rich and famous glamorous holiday seekers has sought protection under federal bankruptcy laws from the anvil of foreclosure. A Connecticut real estate company that specialized in loans was about to foreclose this 25,000-acre resort, for a due amount of $12.5 million. The move was forestalled. Bankruptcy had been filed in a federal court in Midland.

The Chapter 11 filing, running into 8 pages, stated that Lajitas Resort Ltd owed 20 unsecured creditors, more than $1 million. This included $40,000 to Golf Channel. However the $12.5 million, which it owed to Prime Assets Funding, the Greenwich, Connecticut Company, which had initiated the foreclosure, was not included.

Steve Smith, a multimillionaire from Austin, had bought the property for approximately $4.5 million in an auction in 2000. Smith was not available for comments. Last year he had been vociferous to the media about his grand plans for a luxury hideout for the richest among the rich. The prime attraction was the remote location at the junction of the Mexican border and two national parks – the Big Bend Ranch Sate Farm and Big Bend National Park. The isolation was highlighted by the fact that the nearest commercial airport was 250 miles away. The ambitious development plans included extension of golf course, construction of the latest type of clubhouse and a housing complex with 1,000 high-end properties. Figures however reveal that in 2006 only five condominiums and less then 12 homes were sold.

A manager of the Prime Assets Funding, Frank Harrison, says that he had an idea that property worth about $9 million had been sold although he did not know about the exact number and type of units. He added that the loan had been made to Lajitas in 2006 on the presumption that the investment would be sound. Unfortunately a year had gone by but no payments had come in, making doubts arise about the repayment of the loan itself. With no other alternative or options left open, the company was forced to move plans for foreclosure, sell the property at an auction, and realize its dues. All that they were interested in was to get back their investment. The bankruptcy strategy did not come as a surprise to them.

It remains unclear what effect the filing of this bankruptcy will have on the Lajitas property owners.

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