Future of ‘the Hole’ opens to developer’s creditors
June 11, 2010
SOUTH LAKE TAHOE, Calif. – What will become of the stalled convention center and condominium project near Stateline could be dictated by Lake Tahoe Development Company’s creditors.
Michael Rosenfeld, a potential investor, pulled out of the project in May, ending the development company’s “exclusivity period” to submit a reorganization plan to federal bankruptcy court, said City Attorney Patrick Enright on Thursday.
Lake Tahoe Development Company filed for Chapter 11 bankruptcy in October after being unable to secure funding for the $420 million project across from Heavenly Village.
Because the development company’s exclusivity period has ended, the company’s creditors can now submit their own plans for the company’s reorganization, Enright said. The end of the exclusivity period does not prevent Lake Tahoe Development Company from submitting reorganization proposals.
Any reorganization plan would need to be approved by the company’s creditors and the court before moving forward, Enright said.
In December, Lake Tahoe Development Company partners Kevin and Randy Lane, proposed reducing the size of the project’s 477 condominiums and modifying the project’s phasing to decrease construction costs in an attempt to get the project restarted.
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Additional proposals have not appeared in federal court records and Enright said he has yet to see any reorganization plans from creditors.
“What’s going on right now is the creditors are talking to each other, but I haven’t heard anything,” Enright said.
How long it will take for creditors’ plans to be presented to the court is unknown.
The national economy may have to turn around before construction resumes, said Mayor Kathay Lovell on Wednesday.
Lovell pointed to the Elk Grove Promenade, a mall project in California’s Central Valley that also stalled following the developer’s bankruptcy, as evidence the situation facing the South Shore project is not unique.
“We’re not alone in this boat,” Lovell said.
Lovell said she was optimistic about the future of the project, noting the Embassy Suites project experienced similar delays.
Still, construction isn’t likely to resume soon, Lovell said.
“I don’t anticipate it’s going to be in the very near future,” Lovell said.