Questions abound despite Lake Las Vegas ruling - Business

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Aug. 09, 2008
Copyright © Las Vegas Review-Journal

Questions abound despite Lake Las Vegas ruling

Creditors seek answers after $127 million in post-bankruptcy financing OK'd

By JOHN G. EDWARDS
REVIEW-JOURNAL

Bankruptcy Judge Linda Riegle concluded the first chapter of the Lake Las Vegas bankruptcy saga, but readers may find some of the next few chapters even more interesting.

Riegle approved $127 million in post-bankruptcy financing for the 3,600-acre luxury Henderson community on Tuesday, despite complaints that $49 million of the money will go to pay pre-bankruptcy claims of some creditors. The judge accepted the argument that Credit Suisse, which arranged the syndicated loan, was the only source for financing for the project, particularly given the real estate recession.

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Next, creditors are looking forward to asking questions about Lake Las Vegas at an Aug. 22 meeting at the Foley Building.

Observers, for example, express interest in the relationship between investment banks and Atalon Group, which became the owner of Lake Las Vegas after the previous owners defaulted on loans.

The most interesting chapter is likely to unfold when Lake Las Vegas starts identifying assets and possibly filing lawsuits to recover more assets.

Nothing in the bankruptcy case record indicates that the debtors will pursue lawsuits against the previous owners or others.

However, Frederick Chin, chief executive officer of Lake Las Vegas, filed a written statement in bankruptcy court, outlining a series of controversial events that could be the subject of lawsuits.

Chin criticized former Lake Las Vegas owners Ron Boeddeker, owner of Transcontinental Corp. of Henderson and Santa Barbara, Calif.; and Sid and Lee Bass, billionaire Texas brothers.

Boeddeker was reported to be traveling and unavailable for comment. The chief financial officer for Sid Bass, who declined to give his name, said the Bass family doesn't comment to the media.

In 2004, the previous owners pulled $470 million from Lake Las Vegas, leaving the project with too little money "to achieve its business plan," according to Chin. This represented a large portion of money that Lake Las Vegas had borrowed from a group of lenders organized by Credit Suisse, a Wall Street firm.

Chin said that the previous owners agreed to turn over the property to Chin's group in January if the previous owners failed to refinance. The previous owners failed to refinance the property, but Chin said Transcontinental executives ordered workers to destroy computer data, e-mail and three garbage cans of paper documents about previous operations in December 2007.

Chin questioned a deal by previous owners to turn over all of the revenue of the Falls and Reflection Bays Golf Courses to Carmel Land & Cattle Co. while Lake Las Vegas was responsible for $1 million in monthly expenses for operation of the courses. Carmel Land, Chin noted, is owned by William Hall Jr., a founding partner of the Fort Worth law firm that has long represented the Bass Family -- Kelly Hart & Hallman.

The previous owners sold Matt Boeddeker, the son of Ronald Boeddeker, a parcel for $247,000 per acre in 2007 although Lake Las Vegas paid the previous owners of the parcel, John and Evonne Allen, for $799,000 per acre the previous year.

Lake Las Vegas Joint Venture and five related companies are in Chapter 11 bankruptcy, which allows companies to reorganize their debts and emerge from bankruptcy as ongoing businesses. Lake Las Vegas hopes to emerge from bankruptcy in 300 days.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. southshore wrote on October 17, 2008 11:33 AM: Fred Chin couldnt be more dishonest. He's trying to discredit a group that did it right. He needs to go back to being a homebuilders accountant and stop trying to run a company that destroys values. Observer wrote on August 20, 2008 10:40 PM: Transcontinental’s scorched earth policy also shows up in who they hired away from LLV in January. They hired a LLV employee, with NO discernable job skills, at a salary of $208,000 a year. Why would they do that? Also, this is just the tip of the iceberg as far as Matt B. and his company Mission Property Developers. Murky Waters wrote on August 10, 2008 06:37 AM: Cynical Observer, who cares who owns the property now. Long story short: Bass and Boeddekers took the mutual funds money (ie people's investments / retirement) and kept it for themselves. When they didn't pay it back, the bank agent took the property. Not any different than Joe Blow failing to make his payments or Enron management using company funds to live an extravagant lifestyle. Of course, in this case, Bass and Boeddeker had the money, they chose to take the money and run when Credit Suisse cut their corporate welfare. CynicalObserver wrote on August 09, 2008 01:18 PM: Frederick Chin is full of craap. Documents in the court file tell the full story. Debtor's Claims Agent's free view website at http://www.kccllc.net/llv under the tab "Court Documents" shows full copies of filed court documents. The key document showing how Chin's companies' obtained their interest in Lake Las Vegas is #155's Exhibit 5, the "Assignment Pursuant to New York Uniform Commercial Code Sec. 9-620." In its Paragraph 2 Credit Suisse accepts transfer, assignment, conveyance and delivery of "all membership interests in Borrower" effective January 2, 2008 in consideration of Credit Suisse's reducing its mortgage loan on the Lake Las Vegas properties by $1,000,000. Chin's entity bought the membership interests in the borrower from Credit Suisse, not from any entity owned or controlled by Messrs. Boedekker or Bass. Chin has no contract rights with them. The purchase of Credit Suisse's membership interests by Chin is further documented in Document 106, Declaration of Credit Suisse's Managing Director Didier Siffer. Siffer attached as exhibits the loan documents signed by Chin in connection with his purchase of those membership interests from Credit Suisse. Chin received those interests on a non-recourse basis. If Chin doesn't like what he bought he can walk away. Siffer's Declaration includes a June 20, 2008 Amendment to Credit Agreement which shows that Credit Suisse lent Chin's entities the money to hire attorneys to file this bankruptcy. What Siffer did not disclose was how much Chin paid Credit Suisse for the membership interests in the borrower, or whether Credit Suisse will share in any profits Chin derives from Lake Las Vegas' bankruptcy reorganization. Credit Suisse didn't want the judge to see that information. Who is Chin? A straw man who claims to be the former Chief Financial Officer of Rhodes Homes. Enough said.