The company behind a controversial plan to build 3,000 homes overlooking scenic Red Rock Canyon has filed for Chapter 11 bankruptcy, seeking to reorganize the business amid financial and operational difficulties, court records show.
Gypsum Resources LLC filed the paperwork in Nevada U.S. Bankruptcy Court on July 26. The company owns Gypsum Resources Materials LLC, which operates a gypsum mine on Blue Diamond Hill, where the master-planned development is proposed.
In a subsequent court filing, James Rhodes, the president of Gypsum Resources’ parent company, wrote that he will continue to pursue the housing project.
But Gypsum Resources faces deep opposition from environmentalists worried about losing rural integrity and upending preservation if the project is approved. The company also has been locked in a bitter battle for more than a decade with Clark County leaders as it tries to advance the project.
In a court filing, Rhodes laid out the road to bankruptcy: ambitious growth plans, disrupted mining operations because of equipment failure and bad weather, turnover in the finance department, and disputes over purported defaults in an earlier business transaction.
While the mining company, and a trucking and logistics company it merged with in July, grew net income from $2.9 million in 2015 to $8.5 million in 2017, it ended last year with a net loss of $3.3 million, according to Rhodes’ court filing.
The reversal was caused by increased financing payments connected to a mining-related business transaction, debt and capital expenditures, and operational difficulties on the trucking side of the business.
Still, Rhodes is optimistic that market demand for gypsum is steady and that the company will report positive net income later this year, according to the filing.
“The companies are poised, through reorganization, to emerge financially stronger and more efficient in their respective enterprises,” the company said in a statement Friday. “Finally, (Gypsum Resources) remains steadfast in the prosecution of its constitutional real property rights.”
In May, Gypsum Resources filed a federal lawsuit against the county and its commissioners, accusing elected leaders of violating its right to due process, bias and breach of contract connected to a 2010 settlement agreement, among other things, for failing to act in good faith when reviewing paperwork related to the project.
In one court filing, Rhodes estimated damages at more than $1 billion. And in the company’s statement Friday, much of the blame for the bankruptcy is levied on county delays in approving the housing project.
Commissioner Justin Jones said Friday that policymakers have simply held the developer to provisions agreed upon in the settlement.
The suit also seeks a court order to prevent Jones from voting on Gypsum Resources applications before the board. Before winning election, Jones, an attorney, had served as the legal counsel for the Save Red Rock environmental group, which has been the most vocal opponent of the project.
During a commission meeting in April, where elected officials rejected a request to approve a preliminary plan for the development before a federal agency granted the company access to the site, Jones said he obtained a legal opinion from the Nevada Ethics Commission that said he could vote as long as he disclosed his prior involvement in opposing the project.
He has insisted those ties would not preclude him from being fair and reiterated Friday that he has followed ethics rules to the letter of the law.