News - Local

Monday, Jun. 01, 2009

Developer John King's bankruptcy filings put auction of two properties on hold

Resort properties had been slated

Comments (0) |

A pair of proposed San Luis Obispo County developments owned by hotelier and real estate developer John King has filed for Chapter 11 bankruptcy protection, temporarily halting an auction Monday of the properties at the county courthouse.

King, founder of King Ventures and operator of several local hotels — including The Cliffs Resort, Sycamore Mineral Springs in Avila Beach and the Apple Farm Inn in San Luis Obispo — had planned to build two more upscale resorts on the Central Coast.

Spanish Springs, a 470-acre resort that is part of a larger projected development, was proposed along Price Canyon Road northeast of the city of Pismo Beach, and Vaquero de los Robles, a 386-acre property, near Paso Robles Municipal Airport.

Those plans have been put on hold given the Chapter 11 bankruptcy petitions, which allow debtors to develop a plan for reorganizing their business and pay creditors.

The Spanish Springs project had $17.5 million in assets and $6.6 million in liabilities, while the Vaquero de los Robles project had $11 million in assets and more than $11.5 million in liabilities, according to court documents filed Thursday in U.S. Bankruptcy Court in Santa Barbara.

Some of the top creditors are Planning Consultants of Pismo Beach, Drake Farms Excavating, EDA of San Luis Obispo, Central Coast Fabricators Inc. of San Luis Obispo and Design Haus of Fallbrook, near San Diego.

Rhode Island-based Textron Financial Corp., the lender for the projects, has sought to foreclose on the properties and has filed lawsuits in federal court seeking repayment of loans and fees.

The Tribune reported last week that Textron is suing King, his wife, Carole King, and son, John G. King, for nearly $10.5 million and is seeking to foreclose on the Spanish Springs property to recover $4.7 million that King borrowed against the property.

King was contacted by The Tribune on Monday but declined to comment on the Textron case or the bankruptcy filings, saying only that “hopefully this matter will get resolved in court.”

“It will all be up to the judge,’’ King said.

As for the status of the auction, the bankruptcy filing on Monday “merely postpones it,” said William Beall, an attorney working on the Vaquero de los Robles bankruptcy case and representing John King.

How quickly the bankruptcy proceeds may depend on how fast the creditors want to realize their claims, Beall said.

“We’ll just see how it goes,’’ he said. “We could have an offer to purchase the property tomorrow. On the other hand, it could take a lot longer. Who knows?”

Meantime, some city officials say it’s difficult to predict just what effect the loss of a proposed resort would have on their communities.

“We rely on tourism so much here that having some of those things — such as the golf course — would have been a real asset,’’ Pismo Beach Mayor Mary Ann Reiss said. “It’s hard to say at this point.”

Jim App, city manager of Paso Robles, said Vaquero de los Robles was a concept that is now deferred.

“It was speculative,’’ he said. “We see great potential in developing a destination resort for an area that doesn’t have one. But it’s an opportunity that hasn’t ripened yet.”