Sunday, September 28, 2008

Bond Insurance Company Files Federal Lawsuit Against Grey Rock Developer

Bond Safeguard Insurance Company filed a federal lawsuit against Grey Rock Developer, Land Resource, LLC et al on September 12, 2008. Land Resource, LLC Buffalo Creek is the developer of Grey Rock at Lake Lure.

Plaintiff: Bond Safeguard Insurance Company

Defendant: LR Buffalo Creek, LLC, Land Resource, LLC, Land Resource Group, Inc., James Robert Ward, Robert Vacko, Michael Flaskey, Jason Beaird, Realan Investment Partners, LLLP, DPB Solutions, LLC, Weeks-Grey Rock, LLC, Euram Grey Rock Associates, L.P., Daniel D Dinur, Barrington H Branch, Blue Mist Farms, LLC, Bridge Pointe at Jekyll Sound, LLC, Clarks Hill Lake, LLC, Coastline Properties, LLC, Roaring River, LLC, Laird Bayou, LLC, Laird Point, LLC, Land Resource Group of North Carolina, LLC, Land Resource Orchards, LLC, Land Resource Satilla River, LLC, Land Resource Watts Bar, LLC, LR Baytree Landing, LLC, LR Riversea, LLC, Point Peter, LLLP, Villages at Norris Lake, LLC, Land Resource Meigs County, LLC, LRC Holdings, LLC, Land Resource Round Mountain, LLC, Southern HOA Management, LLC, Wachovia Bank, N.A. and KeyBank USA, N.A.

Case Number:1:2008cv00434

Filed: September 12, 2008

Court: North Carolina Western District Court

County: Rutherford

Nature of Suit: Contract - Other Contract

Cause: 28:1332 Diversity-Other Contract

Jurisdiction: Diversity

Jury Demanded By: Plaintiff


Terry Molnar said...

Read your blog all the time. Though you might post this on your site and reference you got it from Terry Molnar at Southern Way of Life

Thank you

On January 21, 2008 Land Resource will go on the auction block to sell most of its assets after having filed Chapter 11 protection on October 30, 2008. I am hopeful that a quality and well funded developer will step in to clean up the mess left behind. Also, Judge Arthur B. Briskman of the U.S. Bankruptcy Court in Orlando, FL approved a plan whereby five Land Resource executives will share in an incentive program based on a percentage of the sale proceeds. The report states that the five executives will each receive an equal cut of a sliding percentage ranging from 1.5% to 3% based on the outcome of the sale. The incentive appears to be capped at just under $500,000 meaning that each Land Resource executive would receive around $100,000.
The executives are being rewarded incentives for “extra work” done in preparation for the auction of Land Resource assets. They are credited with helping maximize the value of debtors’ assets as well as taking actions which reduced the debtor’s workforce in a timely manner. The incentives were also approved with the hope that this may encourage some of these executives to remain with the company after the sale.
The five executives held key positions at Land Resource LLC including Executive Vice President of Acquisition and Development; General Counsel; Vice President of Finance; Senior Project Manager; and Regional Development Director. Robert Ward and Mike Flaskey are not included in this incentive program.
Paying incentives to key employee’s during a bankruptcy or corporate reorganization is a standard practice. It really makes sense if you think about it. Corporate knowledge held by key players can sure make the wheels turn much more efficiently and hopefully benefit all stakeholders, including property owners.
It is also understandable why current property owners are disturbed by this decision. Land Resource has left a trail of uncompleted communities across the southeast and you have to wonder where all the money went. Seeing any executive or manager associated with Land Resource receive an “incentive” is hard to swallow.
The Winter 2008 Land Resource Newsletter highlighting their 10 year anniversary stated that Land Resource had undertaken 19 developments across the Southeast United States, 7* of which have been completed and turned over to the Home Owners Association. The 7 communities that Land Resource claims to have completed are:
Tolomato (Darien, GA)
Misty Harbor (Kingsland, GA)
Laird Bayou
Avery Park
Blue Mist Farms
Baytree Landing
Satilla River
*Old Orchard (in the newsletter Land Resource claims to have completed 7 communities, however according to their chronological timeline provided at the bottom of the document, Old Orchard was also completed making the number of completed communities 8.)
The newsletter claims that 12 communities are in various stages of completion. Again, according to their chronological timeline provided at the bottom of each page, only 11 communities are consisted under development. Provided is a list of the 11 incomplete developments along with their respective launch date:
Cumberland Harbour (Nov 2002)
RiverSea Plantation (Apr 2004)
Laird Point (May 2004)
Docks at Caney Creek (Jul 2004)
Goodfield Landing (Sep 2004)
Grey Rock at Lake Lure (Apr 2005)
The Villages at Norris Lake (Jun 2005)
Stillwater Coves (Nov 2005)
Bridge Pointe at Jekyll Sound (May 2006)
Roaring River (Sep 2006)
Wild Ridges (Oct 2006)
Click on this link to read Land Resource’s Winter 2008 Newsletter

John Dale said...

This is really something I can understand. Thanks for the article I have subscribed to your rss.