Lake at Las Vegas Joint Venture files Chapter 11 bankruptcy amid real estate market challenges

By Caroline Salls

Pittsburgh, July 17 - Lake at Las Vegas Joint Venture, LLC and several of its interdependent subsidiaries filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Nevada, citing a combination of poor liquidity, substantial debt service, extremely challenging real estate market conditions and other legal and financial issues, according to a company news release.

The joint venture is the master developer of Lake Las Vegas Resort.

In conjunction with the Chapter 11 filing, the company said it has received commitments for up to $127 million in debtor-in-possession financing from a group of lenders led by Credit Suisse as agent.

The company said the new financing would be used in part to fund ongoing operations and assessments related to pre-bankruptcy obligations, including critical repairs to the Las Vegas Wash bypass conduit underlying the 320-acre man-made lake at the center of the 3,600 acre master-planned community.

Additionally, the company said it would work to satisfy some of its financial and infrastructure-related obligations.

According to the DIP financing motion, the facility the will bear payment-in-kind interest at 2.00%, plus interest at Libor plus 750 basis points.

The DIP loan will mature on the earliest of one year after the bankruptcy filing date, upon termination of the interim DIP facility if the final order has not been entered and on the effective date of a plan of reorganization.

The company is seeking interim access to $1.45 million of the DIP financing.

"The decision to reorganize under Chapter 11 in large part reflects our belief that we can reinvigorate Lake Las Vegas as a premier master-planned community," president Frederick Chin said in the release.

"We believe that with a realistic capital structure and business plan, Lake Las Vegas will provide enormous opportunities for those associated with it, including residents, visitors, employees, builders, developers and vendors."

LLV Holdco LLC, a subsidiary of Las Vegas-based Atalon Group, assumed ownership and management control of the master-planned community in early January 2008 after the former ownership group defaulted on about $540 million in loans in 2007, according to the release.

According to court documents, Lake at Las Vegas Joint Venture has $100 million to $500 million in assets and $500 million to $1 billion in debt.

The company's largest unsecured creditors include:

• Las Vegas Paving, Las Vegas, with an $8.52 million litigation claim;

• Tousa, Inc., Hollywood, Fla., with a $7.56 million litigation claim;

• Woodside Homes, Inc., Las Vegas, with a $2.18 million litigation claim;

• John F. O'Reilly APC, Las Vegas, with a $1.42 million trade claim; and

• Contri Construction Co., Las Vegas, with a $1.28 million trade claim.

Lake Las Vegas Resort is a 3,592-acre master-planned residential and resort community adjacent to Lake Mead National Recreational Area and 20 miles east of the center of Las Vegas. The joint venture's Chapter 11 case number is 08-17814.

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