David Bagwell, a Colleyville luxury home developer has placed the partnerships that own three of his subdivisions into Chapter 7 bankruptcy so that he can avoid foreclosure on the undeveloped land. The group of creditors who hold the debt for the partnerships called Old Grove Ltd, Broughton Ltd. and Broadland Ltd., demanded payment from Bagwell, forcing him to file bankruptcy or face foreclosure. By filing Chapter 7 bankruptcy for the partnerships, the remaining lots in those subdivisions will be sold to repay creditors.
There are between one and 49 creditors in each filing, Bagwell said, and assets and liabilities are estimated at $1 million to $10 million in each filing. "It's going on all over the country. It's a sign of the times," Bagwell said, declining to comment further.
Bagwell isn't the only developer forced to choose between foreclosure and bankruptcy. Just recently, the Dallas-based owner of the Village at Camp Bowie shopping center in Fort Worth recently said he was prepared to seek bankruptcy protection to avoid foreclosure on his commercial properties. But when lenders realized that the commercial real estate developer was willing to file bankruptcy, they decided to not file foreclosure and are currently negotiating the repayment of the loan.
In today's current economic climate many commercial real estate developers are unable to secure the financing necessary to continue projects and existing lenders are demanding repayment of their loans as the real estate market continues to nosedive. With the number for commercial real estate foreclosures already above average, many lenders prefer to work something out with debtors and avoid the hassle of bankruptcy.