The end of the recession hasn’t meant the end to financial woes for a high-profile Las Vegas developer.
Three creditors have filed to force John Ritter, chairman and CEO of Focus Property Group, into personal involuntary bankruptcy.
Pacific Western Bank, SV Litigation SPE LLC, and Multibank 2009-1 RES-ADC Venture LLC filed the case Monday in U.S. Bankruptcy Court for the District of Nevada. The petition seeks to place Ritter into Chapter 7 bankruptcy to liquidate assets and collect $25.6 million in loan guarantees that Ritter personally made.
At least one of the creditors has an agreement with Ritter in which the developer acknowledges his unpaid debt, said Gerald Gordon, a partner in the Las Vegas law firm of Garman Turner Gordon. Gordon represents the creditors.
Two others already have judgments against Ritter, Gordon added.
He said he expects other creditors with judgments against Ritter to join the case soon.
An attorney for Ritter said in a Thursday statement that Las Vegas’ status as “ground zero for the Great Recession and housing crisis” had a “very negative effect” on Ritter’s financial condition, as it did for other local developers.
Since the recession, Ritter “has consistently attempted to work with his creditors to reach constructive and consensual solutions and has successfully resolved the vast majority of his outstanding obligations,” said Roberto Kampfner of the law firm of White & Case LLP. “Mr. Ritter fully intends to continue that effort notwithstanding the involuntary filing against him and hopes his creditors will do the same. Importantly, the involuntary filing is against Mr. Ritter alone and is not a filing against Focus Property Group. Mr. Ritter has no comment at this time on the merits of the petition, but looks forward to defending himself in court.”
At issue are properties that Ritter owned through Focus. He sought investors to help develop the properties, but he personally backed the loans. When property values tanked, Ritter himself had to make good on the deficiencies.
Gordon said he’s not sure where the properties were, but he said “they’re long gone or dealt with.”
It’s not Ritter’s first brush with financial trouble.
During the housing bubble, his company bought large tracts of federal land at highly inflated prices through public auctions.
Along with seven home builders, Focus spent $557 million on 1,953 acres of Bureau of Land Management property in 2004 for the 8,500-home Inspirada master plan. In 2005, it spent another $510 million on 1,700 acres at U.S. Highway 95 and Fort Apache Road, with plans for a 16,000-home master plan called Kyle Canyon Gateway.
But by February 2008, home sales across the Las Vegas Valley had plummeted. Focus could no longer cover interest payments on the Kyle Canyon property. Wachovia Bank foreclosed on the land in November 2008 before a single home was built.
At Inspirada, Focus and its partners sold about 650 homes before JPMorgan Chase forced the developers into involuntary Chapter 11 bankruptcy in December 2010.
Both projects have new owners and are back under development. Olympia Cos., which developed Southern Highlands, has reimagined Kyle Canyon as Skye Canyon, a 9,000-home master plan with an outdoors-focused lifestyle. Homes are under construction now and a grand opening is planned for March 16.
At Inspirada, four builders led by Pardee Homes began rolling out dozens of new models in 2014.
Focus has had success with some projects.
Its 3,500-acre Mountain’s Edge, at Blue Diamond Road and Rainbow Boulevard, was the nation’s fifth best-selling master plan in 2014, with 609 sales, or about 10 percent of the local new-home market, according to Maryland consulting firm RCLCO.
Focus’ 1,200-acre Providence at Grand Teton Drive and Hualapai Way ranked No. 13 in 2015, with 452 sales, or about 6.5 percent of the local market.
Both communities are close to build-out.
This is a developing story. Please check back for updates.
Contact Jennifer Robison at email@example.com. Find @_JRobison on Twitter.