Olmsted Developer Seeks Bankruptcy Protection
An advertised foreclosure sale of three Olmsted Village properties was halted Thursday when the corporations involved filed for reorganization under federal bankruptcy laws.
The three corporations named as debtors in the sale have filed under Chapter 11, which allows them to work out a way to continue operations. It does not mean the companies are going out of business.
Chapter 11 proceedings are designed to rehabilitate a creditor instead of forcing the sale of property that pays only a fraction of the debts involved.
The foreclosed properties are parts of Olmsted Village, a larger complex of shopping centers, offices and a hotel off N.C. 211 just west of Pinehurst. It is in the town limits of Taylortown. Only certain parts of the larger center are involved.
Major stores in the parcels, the so-called "magnet" stores, are open and expect to stay open, according to Pinehurst attorney Jim Van Camp. He represents developer Marty McKenzie, who has personally backed his developments as a guarantor on the loans involved.
Jos. A. Bank Clothiers, Lowes Foods, Rite-Aid Pharmacy and the new Wachovia Bank branch are also protected by agreements written into their leases, according to court documents.
The Chapter 11 reorganization would not affect them in any case, Van Camp said. There is nothing in these proceedings to alarm any of the many shops and restaurants in either Olmsted Village or its sister center, Camellia Parke, he said.
All this means is that three corporations have filed Chapter 11 petitions with a schedule of assets and liabilities and a statement of financial affairs. The objective is to adjust and reorganize their obligations so as to allow business to continue.
Most of the time in such cases, the debtors remain in possession of the property, while they develop a plan and generate funds to pay the debts. Sometimes a trustee is appointed upon the request of creditors.
The ability of these corporations to remain in possession and to continue to operate the business is likely a substantial reason for their decision to file under Chapter 11 - it puts a stay on proceedings against them like the foreclosure sale while still offering protection to the creditor on the loans.
But coming up with a reorganization plan and its approval take time. In the meanwhile, during the period between their filing and confirmation of a plan, business will be carried on pretty much as usual.
Contact John Chappell at (910) 783-5841 or by e-mail at email@example.com.
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