Lake at Las Vegas: plan of reorganization took effect on July 15

By Caroline Salls

Pittsburgh, July 16 - Lake at Las Vegas Joint Venture, LLC has emerged from Chapter 11 bankruptcy, according to a company news release.

The company's plan of reorganization took effect on Thursday, according to a filing with the U.S. Bankruptcy Court for the District of Nevada. The court confirmed the plan on July 1.

"The homebuilders, creditors, residents, homeowner groups, vendors, and the City of Henderson worked together to preserve the integrity of the community, resolve a multitude of complex issues that hindered its continuation and establish a platform for the future that enhances the objectives of property owners, homebuilders, lenders and local government," Lake Las Vegas chief executive officer and The Atalon Group LLC founder Frederick E. Chin said in the release.

Chin said that the challenges faced in reorganizing Lake Las Vegas were exacerbated by the unprecedented downturn in the real estate and capital markets throughout the United States.

While in bankruptcy, the company said it resolved ownership and property boundary issues, allowing landowners to develop or market their property; settled and resolved third-party litigation, disputes with homeowners associations and more than $25 million in mechanics' liens; and completed critical repairs to the community's existing infrastructure and added funds to construct other infrastructure to allow future development.

According to the release, Lake Las Vegas will remain under the stewardship of The Atalon Group, which will provide asset management services to the company for the benefit of the new owners.

Over the next 18 months, Atalon Group principals Chin and James Coyne will oversee land sales in phases I and II of the community and re-focus the company's efforts on the long-term development and value maximization of phase III.

Creditor treatment

Treatment of creditors will include:

• Holders of pre-bankruptcy lender claims will receive 1% of the equity of the reorganized company and warrants to purchase up to 25% of the equity to be triggered as the recovery to debtor-in-possession lenders exceeds specified benchmarks. These creditors will also receive 80% of net litigation claim proceeds;

• Holders of debtor-in-possession lender claims will receive a share of 94% of the membership interests in reorganized LLV Holdco;

• Holders of mechanics lien claims will receive either a secured note to be paid over three years or the collateral securing the claim; and

• Holders of general unsecured claims will receive a share of $1 million in cash and up to 10% of net litigation claim proceeds.

Lake at Las Vegas Joint Venture LLC, a 3,592-acre master-planned residential and resort community, filed for bankruptcy on July 17, 2008. Its Chapter 11 case number is 08-17814.

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