Homebuilder and developer James Rhodes, who filed bankruptcy petitions for many of his real estate holdings in spring 2009, is buying some of them back.
Bankruptcy Judge Linda Riegle on Wednesday entered an order accepting the only bid for 1,600 acres near Kingman, Ariz., from Sagebrush Enterprises, which has Rhodes as its president.
Sagebrush agreed to pay $1.4 million or about $8,700 an acre for the land, most of which is undeveloped. Rhodes’ new company, Harmony Homes, didn’t respond to a request for comment.
Analysts compare Rhodes’ purchase with that of the Fertitta family members who regained an equity interest in Station Casinos through a bankruptcy sale.
Frank and Lorenzo Fertitta are part of Station Casinos’ founding family and held ownership interests in the casino company when it filed for bankruptcy in July 2009. They also were among the equity owners who agreed to buy Station Casinos properties out of bankruptcy in August.
Nancy Rapoport, a University of Nevada, Las Vegas, bankruptcy law professor, said there’s nothing wrong with Rhodes’ transaction as long as the bankruptcy court followed correct procedures.
"There are actually protections to keep people from abusing the system," she said.
Debtors who file for bankruptcy pay a personal price in terms of loss of privacy, about their assets, debts, creditors and financial books, she said.
"It’s nakedness," she said. "It’s definitely not fun."
However, she added, "There are always people looking to make money in bankruptcy" by purchasing distressed assets.
Those investors had an opportunity to bid and didn’t see value in the property, she said.
In court papers, Colliers International Senior Vice President Michael Stuart said that he marketed the properties to 8,500 parties and contacted 3,500 brokers in the region, plus 4,400 brokers with his firm.
The land is part of the incomplete Pravada master-planned community that is west of Kingman at Golden Valley. It includes four model homes, which may need to be demolished; five unfinished homes; and nine other parcels within five miles of Pravada.
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