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Report: Three Stalled SunCal Developments Could Be Sold

A trio of properties run by Irvine-based master developer SunCal Cos. could soon be put up for sale at a fraction of their former value, following a recent decision in Santa Ana’s federal bankruptcy court, the Wall Street Journal reports.

A local bankruptcy judge ruled last week that Chapter 11 trustee Alfred Siegel can make plans to sell the stalled 6,000 home McAllister Ranch development near Bakersfield, as well as two unfinished projects in Riverside County, McSweeny Farms and SummerWind Ranch.

The three SunCal projects total more than 3,500 acres, and have been operating out of bankruptcy protection for more than two years. The projects have more than $300 million in debt tied to them.

They were initially financed in part through New York’s Lehman Brothers Holdings Inc., which is pushing for a court-overseen sale.

Lehman, which itself is in bankruptcy, and other first-lien lenders are owed $230 million, according to court documents.

The financier plans to make a $45 million credit bid for the three properties, which earlier this year were valued at about $62 million, according to a report in the Wall Street Journal.

The judge’s ruling prevents Lehman’s commercial paper unit from immediately foreclosing on the properties, which instead will be sold through the bankruptcy court process.

SunCal opposes Lehman’s sale plans. The developer expects to file its own bankruptcy exit plan for the properties, its lawyers told the Wall Street Journal.

The case involving the three properties is being handled separately from a bulk of SunCal’s bankrupt properties in Southern California, which have been in legal limbo since 2008 thanks in part to Lehman’s own financial woes.

Lehman invested more than $2.3 billion into more than 20 SunCal projects during the height of the real estate market.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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