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 Today's SunCal Target: Lehman ALI, Inc. View next topic
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Today's SunCal Target: Lehman ALI, Inc.
PostPosted: Thu Nov 20, 2008 7:20 am Reply with quoteBack to top

Today, various wholly controlled members of The SunCal Companies put three of their project specific entities into voluntary bankruptcies in the U.S. Bankruptcy Court for the Central District of California, Santa Ana branch.

All three of today's filings appear to have Lehman Ali, Inc. as the project mortgage lender, according to the filings' Verified Creditor Mailing Lists.

Before listing today's Lehman related SunCal bankruptcies, a question. Is it Lehman ALI, Inc. or Lehman Ali, Inc. ? As the pre-election furor over spurious allegations that Obama is a Muslim intensified, I saw the "arabification" of Lehman ALI's name into Lehman Ali, as in Muhammad Ali. Does anyone know the proper capitalization of the "ali" part of its name? Even SunCal's lawyers are inconsistent in its capitalization

Anyway, the three entities where voluntary Chapter 11's were filed are:

Tesoro SF, LLC - Case 8:08-bk-17523 (Los Angeles County Project)
SCC Communities LLC - Case 8:08-bk-17572 (San Bernardino Co. )
North Orange Del Rio Land, LLC Case 8:08-bk-17574 (City of Orange CA)

Amusing comments about these new debtors:

Tesoro SF, LLC is allegedly a housing development built on the old "pig farm" for Farmer John's Bacon, Los Angeles consumers' favorite breakfast food. Comments are made by homebuyers about the smell of the soil in their neighborhoods. Every time I see the word "Tesoro" I think pig farm, even though I know that is not what the word means.

As to North Orange Del Rio Land, LLC, The SunCal Companies were in such a big hurry to get the case filed, none of the documents in the court's online docket are signed by the Manager of the Debtor, and no Creditors Mailing List is filed, even though the unsigned form verifying the mailing list was filed. I guess the clerks are getting so used to all of the SunCal filings that they are just giving the cases numbers without looking at the documents. Yes, I know that filings can be made electronically, but the electronic filing plus the missing creditors mailing list shows me that somebody was in a big rush to get this one filed. The petition for North Orange Del Rio Land, LLC shows assets valued in the range of $50 Million to $100 Million, and aggregate debts in that same broad range. The top 20 unsecured creditors are only owed a total of $4.1 Million when the 20 Largest Unsecured Creditors chart is added up, so this project must have a whopping mortgage balance.

In contrast, debtor SCC Communites, LLC has $1 Million to #10 Million in value of its assets, and less than $50,000 in claims. Hard to figure out why this case was taken into Chapter 11, other than its connection with Lehman ALI, Inc.

Finally, the much awaited involuntary Chapter 11 petition was filed against SunCal Oak Knoll, LLC, as Case 8:08-bk-17588.

The filing did not disclose the identity of the Lehman entity which is the mortgage lender on the project, an important question given the "only half demolished" status of that redevelopment project. The project is in the City of Oakland, and described in great detail today by the Alameda Times Star. See:


The petitioning creditors were CST Environmental, owed $4.083 Million (which it claims is secured by a mechanics lien, SunCal Management LLC, owed $451,000 and and "The Professional Tree Care Company" of Berkeley, Ca owed $93,975.

In the nature of "karma coming back to bite a creditor", tree lovers in the East Bay area had been vociferously complaining about The SunCal Companies chopping down massive numbers of huge old oak trees on this "Oak Knoll". As a result, The Professional Tree Care Company being one of the unpaid petitioning creditors is just.

The filing of this last 1 of 9 involuntary bankruptcies, predicted by the petitioning creditors' lawyer in an interview with The Orange County Register possibly completes the list of projects where Lehman entities will have to fight to keep projects in which they have invested, as equity owners, out of bankruptcy.

However, SunCal did not presage the filing of today's 3 voluntary bankruptcies relating to debtors where Lehman ALI, Inc. is their mortgage lender. As a result, followers of the Lehman/SunCal saga are left to wonder whether SunCal has even more projects, tainted by Lehman, which will ultimately fall into Chapter 11.

The two saddest people in Orange County tonight undoubtedly are Bruce Elieff, principal of The SunCal Companies, and Bankruptcy Judge Erithe Smith, both of whom will struggle with a mind-boggling array of business and legal issues pertaining to these 30 developer entities and their projects.

As these cases progress, through the filing of Declarations by remaining Lehman employees, all of us will gain a sense of "Who is running the real estate shop" bankrupt and not, among Lehman's remaining employees. As reported by the New York Observer, and in one case by the New York Times, even though it did not buy Lehman's real estate portfolio, most of the senior Lehman real estate executives went onto Barclays' payroll for a few weeks, only to be separated from employment in what appeared to be one mass ...leaving heaven knows who at Lehman's offices actually running that debtor and its not-bankrupt affiliates' real estate operations.


As Yogi Berra said "It's like deja vu all over again."
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