Phoenix developers challenge bankruptcy by Mortgages Ltd.

Rendering of Hotel Monroe project, downtown Phoenix, AZ[Source: Andrew Johnson, Arizona Republic] — Developers worried about Mortgages Ltd.’s dwindling assets asked the U.S. Bankruptcy Court on Monday to convert the real-estate lender’s Chapter 11 bankruptcy case to a Chapter 7.  The change would significantly affect the Phoenix-based company, other borrowers and the company’s nearly 3,000 investors.  Specifically, Chapter 7 proceedings would halt the Phoenix-based firm’s efforts to obtain interim financing for stalled projects while in bankruptcy.

Mortgages Ltd. has been meeting with other lenders, seeking money to pay for business expenses and continue funding unfinished developments such as Hotel Monroe in downtown Phoenix, [Chateaux on Central in midtown Phoenix,] and the Centerpoint condo towers in downtown Tempe.

The motion filed Monday came from Rightpath Limited Development Group LLC, one of several borrowers that claim Mortgages Ltd. did not fully fund its loans.  Scottsdale-based Rightpath is developing a spring-training and entertainment facility in Glendale.  Its motion asksthe court to convert the Mortgages Ltd. bankruptcy case from Chapter 11 to Chapter 7.  [Note: To read the full article, click here.]

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