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Cordoba Ranch CDD developer files for Chapter 11; bondholders wary of trend - Municipal Market Access

Source DebtwireStory

Cordoba-Ranch Development LLC, a developer in arrears on payments that back bonds issued by Cordoba Ranch Community Development District, filed for Chapter 11 bankruptcy protection yesterday in Florida.

The filing comes several weeks after a federal bankruptcy judge approved the reorganization plan for Fiddler’s Creek LLC, another developer responsible for paying special assessments on bonds issued by two different CDDs. The plan approved in that case deferred bond payments for up to two years, a change bondholders vigorously opposed.

Some Florida CDD investors expressed concerns that struggling developers would use the Chapter 11 process to restructure bond debt without the consent of bondholders. Whether Cordoba-Ranch intends to alter its outstanding CDD bond debt, which totals about USD 10m, is still an open question. A lawyer for the company was not immediately available for comment.

Cordoba Ranch CDD, located near Tampa, issued about USD 10.2m in special assessment bonds in 2006 to pay for infrastructure in the development, which was slated to have about 285 homes and up to 60 horse stalls, according to the official statement. No homes, however, have been built thus far, said Andrew Sanford, a portfolio manager at ITG Holdings, which invests in CDD bonds.

Cordoba-Ranch’s bankruptcy petition, which listed the Cordoba Ranch CDD as a creditor, was filed in the U.S. Bankruptcy Court for the Middle District of Florida – the same court that considered the Fiddler’s Creek case. About 1,700 homes had been built in the Fiddler’s Creek development.

“This one will be more interesting because it doesn’t have all those residents to worry about,” said Sanford, whose shop invested in Fiddler’s Creek bonds but does not have exposure to Cordoba Ranch. “This is going to be almost a black and white case.”

The bankruptcy filing came the same day that the land owned by Cordoba-Ranch was to be sold in a tax deed sale. The bankruptcy filing, however, stays the sale and prevents the land from being sold for now.

Cordoba-Ranch was delinquent on about USD 700,000 in special assessments that back the Cordoba Ranch CDD bonds for the year ending 30 September 2009, according to the last available public disclosure discussing tax payments.

The last construction update, filed in June 2010, said simply: “There is nothing happening with this project.”

An attorney for the CDD and the CDD manager were not immediately available for comment. The bonds last traded at about 70 cents on the dollar in May, according to Electronic