Friday, Feb. 4, 2011 | 9:03 a.m.
Bankruptcy Judge Bruce Markell in Las Vegas on Thursday approved the involuntary bankruptcy petition filed by banks against South Edge LLC, developer of Henderson's Inspirada planned community.
Lenders led by JPMorgan Chase Bank on Dec. 9 filed the petition, charging defaults under a $585 million credit agreement in which $328 million is still owed. Because of the recession, homebuilders that own the company had stopped buying land in Inspirada to build homes, making it impossible for South Edge to meet its debt obligations.
Homebuilders fought the involuntary petition, but Markell on Thursday granted it and ordered the U.S. Bankruptcy Trustee's office to immediately appoint a disinterested person to supervise South Edge's Chapter 11 bankruptcy estate as trustee.
KB Home, one of the South Edge owners with a 48.5 percent stake, said in a Securities and Exchange Commission filing on Friday that Markell's decision could make it liable under a guarantee for paying the lenders more than $180 million due under the credit agreement.
Los Angeles-based KB Home said if it receives a demand for the $180 million, plus accrued interest and legal fees, it will contest the demand.
``The trustee may or may not pursue remedies proposed by the lenders, including attempted enforcement of alleged obligations of the South Edge members to purchase land parcels from South Edge, which, if successfully enforced, would likely have the effect of reducing the debt owed by South Edge on the loans,'' KB Home said in Friday's filing.
Similar guarantees were made by the other homebuilders that own South Edge and they too may receive demands for payment under the guarantees.
Besides KB Home, the other owners are Focus Property Group, Meritage Homes, Woodside Group, Toll Brothers, Beazer Homes, Kimball Hill Homes and Pardee Homes.