A company formed by former HBO Chief Executive Michael Fuchs to develop an estimated $100 million luxury home subdivision on the Big Island has filed for bankruptcy.
Fuchs made the Chapter 11 filing Wednesday, a day before a foreclosure auction was scheduled to dispose of the unsold parts of the subdivision at Mauna Lani Resort called Ke Kailani.
The bankruptcy filing prevented the auction from going forward yesterday.
Representatives of Fuchs and his company, Ke Kailani Development LLC, could not be reached for comment.
The property targeted for foreclosure represents more than half of the 51-unit subdivision — 25 single-family home lots, land planned for eight condominium units and two completed condo units.
Fourteen single-family home lots and two condos previously sold by Fuchs’ development firm are not part of the foreclosure.
In the bankruptcy case, the largest creditor listed is an affiliate of Texas-based development firm Hunt Cos. with a $22 million claim.
Hunt’s claim resulted from its acquisition of a loan and mortgage late last year from three local financial institutions that lent money to Ke Kailani Development for the project.
The lenders — Bank of Hawaii, Central Pacific Bank and Finance Factors Ltd. — initiated the foreclosure in October 2009, claiming that Fuchs defaulted on loans that matured in 2008.
Hunt is now the plaintiff in the foreclosure case and has a claim secured by the property through its mortgage.
Creditors in the bankruptcy with claims not secured by assets are collectively owed $2 million, according to the filing.
The largest unsecured creditor is Hawaii County, which is owed $883,080 for property taxes on the unsold pieces of the subdivision.
Owners of units at Ke Kailani have a $617,885 claim for maintenance fees the developer is responsible for on unsold units.
Kailua-Kona-based builder Tinguely Development Inc. has a $550,000 claim for construction. And local development consulting firm Hawaiiana Development Group LLC, led by Will Beaton, is owed $15,000 for work on the project.
Beaton helped Fuchs create Ke Kailani, which arose out of a search by Fuchs nearly a decade ago to build himself an oceanfront estate in Hawaii.
A 65-acre parcel largely fronting three golf fairways of Mauna Lani’s South Course caught Fuchs’ eye, and developing other lots for sale became the strategy to help pay for the hefty cost of the land and infrastructure.
Fuchs paid $15.5 million for the parcel in June 2002 and drew up a plan that included 51 homes; condo kitchens designed by Hawaii celebrity chef Alan Wong; a community clubhouse with a saltwater pool overlooking the ocean; and a 5.5-acre inland park with a freshwater pond, pools, a hula mound, jogging trail and courts for basketball, tennis and sand volleyball.
According to property records, Fuchs had early success with sales, including one oceanfront lot that went for $8.5 million in 2005 and two condos that went for close to $4 million each in 2007.
In all, Fuchs sold 14 lots and two condos for a combined $38 million, according to property records. But sales petered out amid the economic recession, and development loans on the project went unpaid.