OR Developers of Riverside Luxury Condo File Bankruptcy

By: Timothy McFarlin | Published: June 8th, 2010 | Category: Bankruptcy

Recently in Oregon, developers of a $100 million luxury condo gone badly, Salpare Bay on Hayden Island, will file for bankruptcy by the end of the first week of June. The plan would go into effect just in the nick of time to halt a local sheriff’s auction of the property,

in order to meet a $4.4 million judgment which was won by JE Dunn Northwest, Inc. for their work on Salpare Bay three years ago. The case is considered the largest negligence case ever filed in Oregon.

Located near Vancouver, Washington and Portland, Oregon, Hayden Island sits in the Columbia River. The main channel of the river, as well as Washington and Oregon state lines, run north of the island; south of the island is another channel, North Portland Harbor. Portlanders consider Hayden Island to be one of its neighborhoods since the island is within its city limits.

The developers’ attorney cited conflicts between the owners/developers and even sought permission from the court to withdraw as legal counsel, in large part, because of their differences. It is not certain if the petition for bankruptcy will be Chapter 7 (liquidation) or Chapter 11 (reorganization) filing.

Both owners, Michael DeFrees (majority) and George Killian (minority) are asking for $390 million from 40 lenders whose denial of a $63.6 million loan; put a stop to the project. Meanwhile, the 40 lenders sued Sussman Shank, LLP, for $447 million claiming their counseling prompted them to refuse the loan, in effect exposing them to liability to the owners.

On June 8th, the Multnomah County Sheriff’s Department auction will feature the Salpare Bay condominium, its property and surrounding marina. The royal 204-unit condo sits by the Columbia River and offers four star marina services.

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