[Source: Andrew Johnson, Arizona Republic, June 29, 2008] — Financing from Phoenix Suns majority owner Robert Sarver’s real-estate company could help bankrupt Mortgages Ltd. continue to fund some big-ticket developments and keep running its business. Phoenix-based Mortgages Ltd. filed an emergency motion Friday to obtain $125 million from Southwest Value Partners. Without the money, Mortgages Ltd. says it will not have enough cash to operate. The company immediately sought $500,000 from the lender for “payroll and other short-term obligations.” Grace Communities, a developer that borrowed money from Mortgages Ltd., said Friday that it opposes the agreement.
Southwest Value Partners is a real-estate investment company of which Sarver is a co-founder and executive director. Its loan to Mortgages Ltd., which finances commercial real-estate projects, would be broken into two parts, including $5 million to pay down debt and pay for business expenses and $120 million to fund six development projects. They include the Centerpoint condo high-rise in Tempe and Hotel Monroe in downtown Phoenix.
Problems at Mortgages Ltd. have intensified since its Chairman and Chief Executive Officer Scott Coles died June 2 in an apparent suicide. The lender filed for Chapter 11 bankruptcy Monday after Scottsdale developer Grace Communities tried to force it to liquidate under Chapter 7. Grace is developing Hotel Monroe, a boutique hotel project that has shut down due to a lack of money to pay contractors. The developer claims Mortgages Ltd. is behind on funding a $75.6 million construction loan it borrowed for the project. In its emergency motion, Mortgages Ltd. listed proposed amounts it might give to developers. They are:
The deal was not finalized as of Friday afternoon and is still subject to the approval of the bankruptcy court. A court hearing is set for 2:30 p.m. Tuesday. [Note: To read the full article, click here.]