People owed money by the bankrupt SunCrest development in Draper want a U.S. Bankruptcy Court judge to allow the developer's assets to be sold to help pay its debts.
The creditors, who are owed about $11 million, have petitioned to move the case from Chapter 11 to Chapter 7 bankruptcy. U.S. Bankruptcy Court Judge William T. Thurman will consider the matter in an Aug. 26 hearing.
In a June auction, Zions Bank successfully bid $25.3 million to purchase SunCrest. The next highest bid was $7 million. Thurman approved the sale a few days later. The bank wants to sell the property to a developer.
Zions' vice president of public relations, Heidi Prokop, said Tuesday that the motion filed by the creditors does not affect the bank's goal.
"It really just doesn't have any bearing on what we're trying to do, which is sell the property to a qualified borrower," she said.
But David Leta, attorney for the creditors, complained the bank's bid was too low and left creditors other than Zions Bank hanging.
"The sale of the acquired assets to Zions has left the debtor with few, if any, remaining assets," the creditors said late last week in their court filing seeking Chapter 7 status. The case is "resulting in a continuing loss or diminution of the estate, and there is no reasonable likelihood that the debtor will be able to reorganize," the creditors' motion said. "Accordingly, the debtor's only option is liquidation."Draper city is not among the parties asking for reorganization, although SunCrest left many of its contractual duties with the city unfulfilled when it declared bankruptcy. The city is waiting to see how Zions will handle the remaining assets and watching new developments in court carefully, said city attorney Doug Ahlstrom.