SunCal files for Chapter 11 for two projects
The Irvine builder seeks bankruptcy protection for a proposed Westside skyscraper and a planned community in San Clemente.
Venerable Irvine builder SunCal Cos. said Thursday that it would seek federal bankruptcy protection for two of its premier planned residential developments in Southern California -- including a 45-story luxury Westside tower on one of the region's most valuable pieces of land.
Faced with the loss of a major investor and a collapse in the demand for new homes, the company plans to file today for Chapter 11 protection for its proposed skyscraper at 10000 Santa Monica Blvd. -- designed by renowned French architect Jean Nouvel and the subject of a battle over the land two years ago that involved Donald Trump.
SunCal on Thursday also filed for protection for Marblehead, a 313-home planned community on a coastal plateau in San Clemente that has been the subject of controversy for decades.
The bankruptcies come against a backdrop of trouble for the privately held SunCal, which along with other builders is facing crushing financial difficulties.
LandSource Communities Development, the parent company of the developer building the 21,000-home Newhall Ranch community near Santa Clarita, filed for Chapter 11 bankruptcy protection in June. Utah-based Woodside Homes Inc. filed for bankruptcy protection in September.
Both the Westside and the San Clemente projects were to be funded by Wall Street investment banker Lehman Bros. Holdings Inc., which collapsed in September. Lehman Bros. had invested $2.5 billion in SunCal-sponsored developments, and its failure has prompted bankruptcy proceedings on 23 SunCal housing projects in various stages of development in California, according to SunCal.
More bankruptcy proceedings on other SunCal projects are expected to follow, company spokesman David Soyka said.
"The bankruptcy of Lehman Bros. forced SunCal's legal action," he said. "Lehman is unable to fulfill its financing obligations."
The bankruptcy filings, including one last week for a planned 2,000-home project in the Sierra foothills of Placer County called Bickford Ranch, have involved partnerships set up by SunCal to do the developments. SunCal itself has not filed for bankruptcy protection.
The 70-year-old company is facing a struggle, though, said housing industry consultant Tara Bleakley, vice president of John Burns Real Estate Consulting in Irvine.
SunCal needs to make quick decisions about which projects in bankruptcy proceedings to sell off and which ones to try to hang on to, she said.
