A deal has been proposed that would allow unsecured creditors of the bankrupt SunCrest development to get back at least a fraction of the money they are owed.
The proposed settlement, detailed in a U.S. Bankruptcy Court hearing Thursday, would convert the case from Chapter 11 to Chapter 7. But before the conversion, more than $850,000 in attorney and administrative fees would be paid. The case then would convert to Chapter 7, and about $360,000 could be divvied among the unsecured creditors.
The proposed settlement was struck after a Wednesday meeting by the Unsecured Creditors Committee; Zions Bank, which bought the bankrupt development at auction last June; and WB Land Investment. As part of the settlement, Zions Bank would pull back its $19 million claim on the estate to $7.5 million.
The settlement proposal now will be distributed to all involved parties, who can formally object if they want to do so. U.S. Bankruptcy Court Judge William T. Thurman is expected to rule on the settlement in about a month.
"We think it's a good deal," said David Leta, attorney for the Unsecured Creditors Committee.
Charles W. Akerlow, president and chief executive officer of Proterra, said the SunCrest developers owed his company $7 million. Through the settlement, money available to creditors could rise to $2 million, he said, because some people still owe SunCrest money.
Still, that won't come near to paying off debts. "It works out to 10 cents on the dollar for everybody that's just my math," Akerlow said. "But it's a step."
Zions Bank, once SunCrest's biggest creditor, bought the Draper hilltop development last June for $25.3 million at bankruptcy auction. Zions now wants to sell the property to a developer. SunCrest has more than 1,000 homes, but 2,452 unsold lots remain.When Zions bought the property, Leta complained that the bank's bid was too low and left creditors other than Zions Bank holding the bag. Those creditors, owed about $11 million, then petitioned to change the case from Chapter 11 to Chapter 7 to allow liquidation.