When City Crossing I LLC filed for protection from creditors in June, it said William Plise "has the financial wherewithal to make a substantial contribution to the Debtors reorganization, which will be essential to a successful reorganization. The Debtor will use the breathing space afforded it by the Bankruptcy Code to negotiate with the lenders to obtain [longer term financing] on a go forward basis."

City Crossing I LLC asked for the case to be dismissed because the guarantors, Plise and Plise-controlled entities, decided not to provide the money necessary to fund the reorganization plan, saying that the benefits outweighed the expense. The Plan required that all administrative expenses be paid on the effective date of the Plan, including all property taxes owed to the City of Henderson in respect, by either City Crossing I LLC or (essentially) William Plise. The amount totaled approximately $650,000 but City Center I LLC had only $225,000.

"The Debtor does not have sufficient cash resources…[and] the guarantors have recently indicated that they are unwilling to contribute," states City Crossing I LLC in its motion to dismiss. "As a result, the Plan is no longer feasible."

The claims against City Crossing are overwhelmingly held by the secured lenders, which hold liens on the property that was to be developed as well as personal guarantees from Plise or Plise-controlled entities. "Dismissal of these proceedings would permit the lenders to foreclose upon their collateral without delay and to pursue the guarantors," states the motion. "On the other hand, if this case is converted, a chapter 7 trustee would be appointed and the lenders may not have access to their collateral for a considerable period of time during which the estate will continue to accrue administrative expenses that it cannot pay in the form of additional property taxes and other costs."

Foreclosure proceedings were allowed to run concurrent with the Ch. 11 filing. As a result, some lenders could be ready to take possession of their parcels in the next few months. After that, lenders are also expected to go after Plise for the difference between the land value and the debt on the parcels.

Site work for the 126-acre 6-million-sf development got underway last year at St. Rose Parkway and Executive Airport Drive. Some $30 million of infrastructure work has been completed when work stopped. The first phase of vertical development, which was supposed to get underway earlier this year, called for an eight-story, 215,000-sf office building, 184 apartments, a 160-room boutique hotel and 175,000 square feet of retail space. The general contractor was Chaparral Contracting, a Plise subsidiary.

City Crossing LLC filed for bankruptcy earlier this month after it was unable to come to terms with one of the lenders, Community Bank of Nevada, a subsidiary of publicly held Community Bancorp, which threatened to initiate foreclosure proceedings after City Crossing defaulted on its $26-million loan. In addition to Community Bank, creditors include First National Bank ($48.5 million), Alpers LP and the Eloit A. Alper Revocable Trust ($37.4 million), Aspen Financial ($20.2 million), Silver State Bank ($13.6 million), First National Capital ($11.8 million) and Clayton Mortgage ($10.2 million).

In explaining how it got into the predicament, the bankruptcy filing states that short-term loans were a reliable way for City Center I LLC to finance development projects prior to the onset of the mortgage crisis. In essence, short-term loans could be refinanced on a yearly basis, which permitted the developer to tap into the equity in the underlying real estate and obtain favorable interest rates, according to the filing. When the credit crunch occurred, the developer was unable to replace its short-term financing or pay it off, forcing it to seek protection from creditors under Ch. 11 of the US Bankruptcy Code after the debt matured in April.

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City Crossing Bankruptcy Case Dismissed

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