A Fairfax County real estate firm has filed for Chapter 11 bankruptcy reorganization after its deal to sell a 24-acre tract in a Fairfax County subdivision fell through.
LandAmerica Property Corp. Inc. of 706 Walker Rd., Great Falls, filed for protection from creditors with the Alexandria Division of the U.S. Bankruptcy Court.
LandAmerica President Donald V. Hyde said the collapse of the deal with another real estate business caused his firm to default on a second mortgage on the land, which it values at $8.5 million.
The would-be purchaser, Mowbray Arch II of Alexandria, has sued LandAmerica in the Circuit Court of Alexandria over the deal.
Mowbray officials were not available for comment.
In June 1989, Mowbray, a company affiliated with the Benchmark Group, an Alexandria-based real estate developer, agreed to buy the 24 acres from LandAmerica for $10.5 million, according to documents filed with the lawsuit.
Mowbray had planned to develop the land and sell the lots to home builders. The land is in the Manchester subdivision on Beulah Road in the Lee District of Fairfax County.
Mowbray, under the sales contract, was to have attempted to have county land-use restrictions removed from the parcel, Hyde said.
According to court documents, LandAmerica and Mowbray disagree over whether that attempt was made.
Hyde denied Mowbray's allegations in the lawsuit.
In its bankruptcy petition, LandAmerica listed $12.5 million in assets, $4 million of which was an estimate of damages it might collect in litigation over the dispute, Hyde said.
It listed liabilities of $7,875,935, $5.6 million of which is the first mortgage held by Trustbank Federal Savings Bank of Falls Church and $1.5 million of which is owed to Sierra Construction of Fairfax.