Bankruptcy for Calpers-backed LandSource

News item from Reuters: "LandSource Communities Development LLC, a large Californian property developer backed by Calpers, the biggest public U.S. pension fund, said on Sunday it had filed for bankruptcy protection."

More: "While not a shock, the news is a blow to companies and funds unable to extricate themselves from troubles in an industry laid low by the credit crisis."

LandSource's primary investment, per Reuters, is The Newhall Land and Farming Company, which owns 15,000 acres of land north of Los Angeles (pictured).

The news is not a shock, according to Reuters, because it was widely reported a month ago that LandSource had defaulted on a loan. At the time, though, LandSource made noises indicating it could avoid bankcrupty: May 9, from the Los Angeles Business Journal: "“(LandSource) did go into default but they are still talking to the lenders about restructuring the debt or modifying the terms,” said Tamara Taylor, a spokeswoman for LandSource. “The hope is that they will be able to renegotiate the terms of the loan to everybody’s satisfaction.”

Aside: Bankcruptcy is not usually to everybody's satisfaction.

May 19, from the L.A. Times: "CalPERS President Rob Feckner said he hoped to forestall a bankruptcy but stressed that "if we incur any losses, they will be minor" because the pension fund is "very well diversified, in good shape."

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: L.A. Times

Comments

[Theorist]

There's a micro trend here: Macfarlane Partners, puppetmaster of CalPers strings, was also involved in the partnership with KB Homes that owned the Woodland Hills apartments recently singed by "welder's torch."

http://www.mercurynews.com/news/ci_9492710

"MacFarlane and KB Home had agreed to share the construction bill for the complexes in Anaheim, Irvine and the San Fernando Valley, but the investment firm ceased payments in late 2007, leaving the homebuilder to cover the shortfalls"

Unions, Pension Funds, Real Estate, Muck -- it's enough to make your head spin.

[desmo]

Wow, it might be "Not a shock" to the people spinning this right now, but it will be a shocking number of dollars lost after this property gets put out on the auction block.

[Cal]

OT: Tooling around the blogosphere I saw that Property Shark had their foreclosure report out for May:

http://tinyurl.com/6kownb

[MyLessThanPrimeBeef]

I posted the story early this morning, linking the Wall Street Journal and I don't get a cyclist's helmet tip?

[Uncle Billy Skis Down Mont Pelerin]

Does that make you angry, MLTPB? Want to vent? I have the perfect place for you:

http://angrylalandians.blogspot.com/

Don't feel too bad though... I know a guy that was all over this story as early as thusday at 8:18 p.m., but gets no recognition at all.

[CD]

Mylessthanprimebeef
I went and read the article you mentioned,very scary, but my favorite quote from you is: This is like a hot tomato and like McDonald's, I am not touching that one.
That was very good. Made my day......

[MyLessThanPrimeBeef]

Uncle Billy, it makes you wonder why one should bother staying up past 8PM. That makes me sooooooooo mad.

CD, well, it's like this: What can't be won with reason is best fended off with laughter.

[Canyon Country Mom]

About 2 weeks ago, Standard & Poors reported that LandSource, Newhall Land's parent company, had $25 Million in cash left in their bank accounts. Standard & Poors had conducted a 'private audit' of LandSource's financial condition at the request of LandSource's mortgage lender, Barclays Bank. So the $25Million cash was real, not funny money.

Yet, in filing Chapter 11, LandSource and Newhall Land chose to royally scr*w all of their California trade creditors by not paying them, even though that $25 Million is cash was available. Now, these local companies are unlikely to ever be paid.

Adding insult to injury, LandSource and their mortgage lender have done a prepackaged Debtor In Possession financing, which is scheduled to be approved at 10AM on Tuesday 6/10, without any meaningful notice to the unsecured California trade creditors, since the bankruptcy was filed in Delaware even though the vast majority of the assets, and all the major unsecured creditors, are in California.

Showing their contempt for their unsecured creditors, LandSource also had the nerve to create a creditors notice website at www.kccllc.net/landsource and purport to provide copies of all of the bankruptcy petitions for the 21 entities, BUT they conveniently left off the most important bankruptcy petition, the one for the parent company LandSource Communities Development LLC.

So the California unsecured creditors who were stiffed should be asking "Where did the last $25 Million go?" From the unsecured creditors schedules on the actual bankruptcy petitions, here are just some of the local companies stiffed by LandSource:

PCL Construction, Glendale, $6,060,480
Park West Landscape, Pacoima $1,245,062
Oak Ridge Landscape, North Hills $`,056,303
Hunsaker & Assoc., Valencia $905,156
Psomas & Assoc., Santa Clarita $816,033
John Burgeson Contractors, Canyon Country $800,157
RC Becker & Sons, Santa Clarita $800,151

There are many more local service providers and contractors from Ventura County, Orange County and LA County south of Mulholland also cheated out of what was due them, while the $25 Million was frittered away, or horded to pay Newhall Land's generous employee payroll and benefit package. See the schedules to the bankruptcy petitions at the website established by LandSource at www.kccllc.net/landsource