Tellico Village is seen in the distance looking over Tellico Lake from the Rarity Pointe waterfront development in 2007. A foreclosure auction of Rarity Pointe property has been nixed after the development firm behind the project filed for bankruptcy protection Monday.
Late move by Rarity Pointe development firm cancels auction
Chapter 11 filing delays foreclosure
By Josh Flory
Rarity Pointe has some foreclosure breathing room —
for now, anyway.
An auction of 204 residential lots, a golf course and other property at the Lenoir City waterfront project has been nixed after the development firm behind the project filed for bankruptcy protection.
Tellico Landing LLC submitted the Chapter 11 petition Monday, listing assets valued at more than $40.4 million and liabilities of less than $8.6 million. The assets, though, consist of $30.15 million worth of real property — including the 204 residential lots and the golf course — and accounts receivable valued at around $10.3 million.
“They’re land-rich and cash-poor,” Lynn Tarpy, a lawyer for Tellico Landing, said of the company.
An entity called WindRiver Investments LLC recently purchased the project’s debt from SunTrust bank and had scheduled a foreclosure auction for today. According to a document on file with the Loudon County Register of Deeds, the president of
WindRiver is Joseph K. Ayres, who could not be reached for comment Thursday.
Lewis Howard Jr., an attorney for WindRiver, said the limited liability company will seek relief in the bankruptcy case to proceed with the foreclosure. “It delays things for a while,” Howard said of the bankruptcy.
The land for Rarity Pointe, which is near U.S. Highway 321, was initially acquired by Knoxville real estate investors Ward Whelchel and Robert Stooksbury, who formed Tellico Landing LLC along with other investors. Rarity Companies Chief Executive Mike Ross has said that group approached him in 2001 and asked for his help and expertise.
Additional land was acquired from TVA, and Ross and the Tellico Landing partners struck an ownership deal, but the two sides later had a falling out. Stooksbury sued a Ross-owned entity in Blount Chancery Court and sued Ross in U.S. District Court.
According to the bankruptcy filing, LTR Properties Inc. — a firm whose registered agent is Ross — is a 50 percent member of Tellico Landing, while Stooksbury and Whelchel are both 25 percent members.
In an email, Stooksbury’s lawyer, Wayne Ritchie, said Ross has been in control of Rarity Pointe for many years.
“It will be for the court to decide whether Mr. Ross’ initiation of bankruptcy proceedings is merely an effort to delay foreclosure,” he said. “Foreclosure should yield a new developer, which should benefit the property owners.”
But Tarpy highlighted an alternative outcome, saying the company is putting together a new marketing plan that will pay all the creditors.
“They’ve been working for a period of time now with … a real estate marketer to crank up the sales effort,” Tarpy said. “It appears that the economy is starting to turn enough that, priced right, … the lots will sell down there and they can complete the development.”
This week’s filing isn’t the first time a Ross-linked company has filed for bankruptcy shortly before a scheduled foreclosure. In April 2010, three Rarity-related companies filed for Chapter 11 protection two days before a scheduled foreclosure sale at Rarity Mountain, in Campbell County.
In December, a judge granted GreenBank relief from an automatic stay in the case, and the bank took the property at a foreclosure auction in April.