LOS ANGELES -- A property owner in a troubled Nevada County, Calif., Mello-Roos district has filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, the county said in a press release on Monday.
Wildwood Estates Inc. filed the bankruptcy petition last Wednesday, according to the release.
The automatic stay imposed under the filing "will suspend for an indefinite period of time the activity of the county in pursuing the collection of the delinquent special property taxes" that secure a $9.1 million Mello-Roos bond issue, the release says. "The county cannot predict what will happen in the bankruptcy action."
Bond proceeds financed infrastructure for Community Facilities District No. 1990-91. Infrastructure is finished for 103 single-family residential lots, the first of three planned construction phases, but county officials said that to the best of their knowledge no lots have been sold.
About $5 million of unspent bond proceeds remain in the project account.
The county warned earlier this month that only about $70,000 is left in the reserve fund following a Sept. 1 debt service payment. There will not be enough money for the next payment, in March 1994, unless outstanding special tax delinquencies are cured or the next installment is paid, the county said in a Sept. 15 release.
A bank which holds a first deed of trust on the property had scheduled a foreclosure sale last Wednesday. The bank has since informed the county that the sale was canceled due to the bankruptcy filing, this week's press release says.
The county said it "is continuing to evaluate its options with the assistance of legal and financial advisers who are independent of those involved in the original issuance of the bonds."
An official at Rauscher Pierce Refsnes Inc., the original financial adviser on the transaction, could not be reached for comment.
An official at First California Capital Markets Group, the underwriter, said on Monday that his firm continues to work on specific details of a potential restructuring because "there are ways to fix this deal."
