Attorneys for Hillandale Development Corp., First Savings Bank of Arkansas and Saudi European Bank are trying to work out arrangements that would allow the pending sale of seven units at the luxurious Hillandale Development in Northwest Washington to go to settlement.
Seven units are currently under contract and are occupied under pre-settlement agreements, according to Jim Rogers, an independent real estate broker hired by the financially beleaguered Hillandale Development Corp., a Texas-based operation that is part of the financially troubled empire of oil and real estate executive Clint Murchison.
First Savings Bank of Arkansas, holders of a $25 million first trust on the 42-acre development, and Hillandale Corp. lawyers reportedly have reached an agreement that would allow those seven buyers to settle.
Attorney James Cope, who represents Saudi European Bank, which holds an $8.3 million second trust on the project, said he is "involved" in negotiations. But apparently there are complications in his client's position because of a court case pending in Dallas involving Murchison.
"We are trying to work out an acceptable approach to the sale of the units at Hillandale that will not impair the prosecution of a pending lawsuit against Clint Murchison in Dallas," Cope said this week.
The problems apparently arise from potential claims by Murchison on how profits from the sale could be allocated. Texas lawyers involved in the case could not be reached before deadline.
Any arrangements negotiated by lawyers to release the units would have to be approved by federal district bankruptcy court Judge George Francis Bason. Bason is presiding over bankruptcy proceedings for Hillandale Development Corp. Hillandale Development filed for a Chapter 11 bankruptcy after Saudi European Bank tried to force the corporation into involuntary bankruptcy. The Saudi bank's action blocked First Savings Bank from foreclosing on Hillandale minutes before the property was to go on the auction block in mid-July. First Savings Bank has asked the court for relief from the stay so that it can proceed wtth foreclosure.
However, Judge Bason has given Hillandale Development 60 days to reorganize or find a buyer for the Northwest Washington project after he agreed with attorneys for the Arkansas bank that there is, at this point, literally no equity in the Hillandale project. But, he deemed the remaining land necessary for any effective reorganization.
Judge Bason gave attorneys for the Arkansas bank the right to mail out letters of their intent to foreclose within 30 days of his order so that foreclosure proceedings could go ahead without undue delay should Hillandale Development fail to find a buyer within the 60-day period.
Bason's ruling came after he heard closing arguments from attorneys representing Hillandale Development Corp., Saudi Bank, First Savings Bank and a coalition of Hillandale homeowners. Hillandale homeowners have hired a lawyer and joined the case on the side of First Savings Bank, supporting that bank's right to foreclose.
In earlier testimony, Hillandale executive Joseph Ogden told the court the development corporation had no money to pay any of its debts.
According to attorney Daniel Litt, who represents First Savings Bank, the interest on the $25 million first trust owed to that bank amounts to more than $10,000 per day. During last week's court session, Litt argued that the value of the Hillandale property is depreciating rather than appreciating. No appraiser has rebutted the testimony of an appraiser for the foreclosing institution who said the property was worth only $19 million, Litt said.
Hillandale Development Corp. lawyers told Judge Bason in closed court two weeks ago that the company has valid offers of interest from two developers but would not reveal their names.
Bason, in his ruling, said those offers "appear to be viable even though neither is final."
After Bason's ruling, Hillandale Development withdrew its motion for a change of venue in the case.