The real estate company spearheading the construction of a luxury housing development near Coalville narrowly avoided foreclosure on Monday after a federal judge greenlit a $4 million loan to temporarily keep the business afloat.
Wohali Land Estates declared bankruptcy in federal court this summer, listing a reported debt totaling more than $13 million. The company specifically filed for Chapter 11 bankruptcy, which offers those in debt an opportunity to restructure operations and finances rather than force a sale.
However, Wohali Land Estates allegedly failed to pay a $3.3 million bill to Coalville on Dec. 1, putting the company at risk of foreclosure.
Wohali developers and the Coalville City Council created a public infrastructure district in 2018 with the intent that Wohali would receive funding for its project while bolstering city infrastructure, including the sewer system. The missed payment earlier this month was slated to pay off a portion of the debt incurred from the public infrastructure district, which required the city and developer to issue millions of dollars in bonds that Wohali was responsible for reimbursing.
State code requires foreclosure proceedings to begin on a property if a developer misses a public infrastructure district repayment. But Chief Judge Peggy Hunt on Monday authorized a $4 million loan to cover the bill in addition to funding other immediate expenses, such as employee salaries.
The loan will be issued by a foreign investment company that is already on the list of Wohali’s top creditors. Other investors, including Park City-based billionaire Doug Bergeron, opposed the loan, though, offering alternatives with the hope that the judge would instead choose their proposal.
They said they were worried the foreign company was angling for a quick foreclosure, as the top creditors in line for repayment would have an advantage in any potential auction if the Wohali property were to go to sale. Bergeron previously stated he was interested in purchasing the Wohali project and revitalizing it as a mixed community of real estate owners and tourists with a hotel on the property.
Hunt described her decision to go with the foreign company as an “interim ruling,” meaning how Wohali is funded through the bankruptcy process may change at a later date. The next hearing is scheduled for Jan. 22.
Wohali Land Estates had already been named as a defendant in multiple civil lawsuits related to alleged financial mismanagement by the time the company declared bankruptcy in August. Court filings indicated the real estate business had between 100 and 199 creditors who were owed between $100 million and $500 million, with an additional list detailing that the company owes $12,908,637 to its top 20 creditors alone.
Two of the companies listed as Wohali’s top creditors — Eave Solar and Knight Trucking — had already filed lawsuits against Wohali Land Estates demanding payment for provided services earlier this year.
Sierra Pacific Windows similarly filed a claim against Wohali Land Estates shortly after the bankruptcy filing, alleging the construction arm of the development enterprise had ordered and received $162,574 in materials and had yet to pay the cost.
Court proceedings for those lawsuits are largely on pause until the federal bankruptcy case is resolved.