Developer Files for Chapter 11 : Debt: Partnership building a Temecula retirement community, led by San Diego-based Buie Corp., blames its woes on soured investments in Executive Life.
A partnership led by San Diego-based home builder Buie Corp. that is developing a Temecula retirement community said Wednesday that it has filed for protection from creditors under Chapter 11 of the Federal Bankruptcy Code, blaming a soured investment in Executive Life, the insurer that failed last April.
The partnership, Margarita Village Development, whose general partner is Buie-Rancho California Ltd., is developing a 2,000-unit residential project called Temeku Country Club, a 470-acre retirement-homes project that is designed around an 18-hole golf course.
Buie, which was founded in 1983, is one of the largest home builders in Southern California. Its sales volume peaked at 752 homes sold in 1989. The number dipped to 549 last year, and will fall to a projected 190 homes for 1991, a Buie spokesman said Wednesday.
Had the partnership not made the bankruptcy filing, it probably would have defaulted on interest payments due on $27.5 million in tax-exempt bonds floated in December, 1989, to finance water, sewers and other infrastructure of Temeku Country Club. The bond issue was to be repaid through taxes on the 2,000 new homes projected for the community.
However, $23.5 million of the gross proceeds were invested by the partnership with Executive Life in the form of guaranteed investment contracts. Executive Life failed in April because of its heavy investments in junk bonds, causing the collapse of its parent company, First Executive Corp.
The bond money, part of which was to have been used to make interest payments to bond investors, remains frozen, and it is still uncertain whether and how much of the bond money will be repaid, the Buie spokesman said.
The Buie-led partnership was also in danger of defaulting on a $10-million first mortgage owed to Ardenwood Financial Corp. and a second mortgage of $25 million owed jointly to Valley Bank and PriMerit Bank, both of Las Vegas. PriMerit is one of Buie’s partners in Margarita Village Development.
Buie also disclosed Wednesday that it is looking for outside equity investors.
