Sequoia Partners - Developer of Paradise Ranch Resort in Grants Pass, Oregon - Files for Bankruptcy Protection

by Randall Reese

This week, Sequoia Partners, LLC voluntarily filed for bankruptcy protection in the District of Oregon bankruptcy court. The company owns and is developing the Paradise Ranch Resortlocated in Grants Pass, Oregon. The project is scheduled to include 100 rental rooms, 200 single-family homes, and an 18-hole championship golf course designed by Jack Nicklaus. Paradise Ranch is also expected to include convention space and retail shops.

In addition to the bankruptcy petition, Sequoia Partners also quickly filed an adversary complaint against Rogue River Mortgage, LLC (described in court filings as a "self-styled arranger of 'creative financing'"), Paradise Ranch Land Development, LLC, and an individual who is identified as a member of both defendant companies and a loan originator working for Rogue River Mortgage. In the complaint, Sequoia Partners reports that it purchased the location for the Paradise Ranch Resort in November 2003 and retained Carling of America, Ltd. to act as construction manager and general contractor for the development. Sequoia received financing for the development projects from Rogue River Mortgage in January 2004 and November 2006. The company later received $4.6 million in additional financing from Home Valley Bank in February 2008. That debt has since been assigned to South Valley Bank and Trust. Between February and August of 2008, Rogue River also provided additional financing, although amounts are not disclosed in the adversary complaint.

Subsequently, Rogue River, Sequoia and Carling of America entered into an Operating Agreement for Construction Loan and Security on September 2, 2008. Pursuant to that agreement, Rogue River committed to provide Sequoia with up to $25 million in secured financing to complete certain projects, including "resort structures, overnight villas, sewer treatment facilities, golf course, roads and utilities infrastructure, including remedial work in a public right-of-way of Josephine County." Sequoia was required to provide Josephine County (where the project is located) with financial assurances to guaranty completion of the development before it could begin selling the single family homes. As security for the obligations, Sequoia provided Rogue River with a blanket deed of trust.

In the bankruptcy court complaint, Sequoia claims that "[d]espite its obligation to do so, RRM failed and refused to loan Sequoia funds necessary to complete the Specific Projects, failed to deposit funds into trust accounts established under the Operating Agreement to pay for enumerated construction items, and further failed to provide funds sufficient to pay Carling for work performed on the Project." These alleged failures caused Sequoia "extreme economic distress" and placed the development of the Paradise Ranch Resort "in peril." Finally, Sequoia alleges that Rogue River also "threatened Sequoia with foreclosure and used its secured position to demand and ultimately obtain additional security from Sequoia . . . in bad faith."

Key court filings to date are listed in the attached document.

For access to all major pleadings filed in this case, please visit:

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Randall Reese

Restructuring Concepts LLC on:

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