Platinum Properties LLC, an Indianapolis upscale residential real estate developer, has filed for bankruptcy protection and is seeking to restructure massive debt ranging between $100 million and $500 million.
Platinum sought Chapter 11 protection on Monday, listing several huge debts to prominent local businesses and business people.
Duke Construction LP of Indianapolis, with a claim of $31.9 million, is listed as the largest unsecured creditor, according to the filing in U.S. Bankruptcy Court in Indianapolis.
Other local unsecured creditors include Christel DeHaan Investment Limited Partnership, with a claim of nearly $11.9 million, and homebuilder Paul Shoopman, with three claims totaling roughly $11 million.
Bank of America is listed as the developer’s largest secured creditor, with an $11.6 million claim.
Platinum listed its assets as $10 million to $50 million.
The developer accompanied its Chapter 11 filing with a complaint against PNC Bank, which is listed as an unsecured creditor with a claim of $16.4 million.
PNC was the lender for three Platinum projects, according to the complaint. After the loans matured in 2009, PNC moved to foreclose on those properties, suing Platinum in Hamilton County. PNC won a judgment in January totaling $16.1 million, according to Bloomberg News.
Platinum’s lawsuit is asking the bankruptcy court to disallow PNC’s claims.
“PNC just kind of refused to participate in working things out," said Paul Rioux, the largest equity holder in Platinum. "We worked real hard not to be in this position."
Platinum attorney Jay Jaffe of Baker & Daniels LLP said much of the debt is the result of Platinum’s acting as a guarantor for loans on projects in which other entities have an interest.
“It’s not like they’re going out and charging up a credit card,” Jaffe said.
One of Platinum's largest projects is the massive but troubled Legacy development along 146th Street in Carmel.
The lead bank on the $100 million project, Bank of America, put the note up for sale in January with an asking price of about $15 million—less than half of what lenders have sank into the project.
Star Financial Bank bought the note within the past two weeks, said Jaffe, Platinum’s lawyer. He said he didn’t know how much Star Financial paid for the note.
Platinum broke ground on the $100 million, 400-acre project in 2007. It’s home to an upscale apartment community developed by Carmel-based J.C. Hart Co., but other parcels eyed for single-family homes, retail and office space have not sold—in part because developers still are struggling to find financing for anything speculative.
Legacy is owned by East Carmel LLC, a Platinum partnership, and is not involved in the bankruptcy, Jaffe said.
Platinum is in discussions with Star Financial to “hopefully develop a strategy to move forward” on the Legacy project, Jaffe said.
The developer indirectly controls about another dozen projects that are not part of the bankruptcy, Jaffe said.
In court papers, Platinum lists five projects it directly owns that are affected by the bankruptcy filing. They include Abney Glen and Bellewood in Carmel, and Maple Knoll in Westfield.
“The debtors are victims of the well-publicized collapse of the residential real estate market that began in early 2006,” Platinum said in court papers. “Total lots sold by the debtors plummeted.”
A group that included Rioux and led by locally based Venture Real Estate tried to put together a $30 million vulture fund in December 2007, but the effort fizzled with just a few million dollars in commitments.
The group, which also included prominent developer Paul Kite and former Marion County Prosecutor Carl Brizzi, wanted to buy unsold condo properties in Florida but couldn’t find enough tangible properties to show potential investors.