A Holly Springs subdivision planned by veteran Triangle developer John Lancaster has filed for bankruptcy before any homes could be built on the property.
Two of Lancaster's companies, Forest Springs and Lyndale Developers, sought Chapter 11 bankruptcy protection last week. The companies listed combined assets of $12.5 million and liabilities of $10.1 million.
Forest Springs, to be located on 81 acres just west of N.C. 55, has 104 townhouse lots and 56 single-family lots that are ready to be built on. One hundredlots have been approved but not developed.
Lancaster's ownership group has a deal to sell the lots and the remaining land to Cary-based Royal Oaks Building Group.
Rich Van Tassel, president of Royal Oaks, said the company expects to complete the transaction despite the bankruptcy filing.
"We're staying in the deal," he said. "Hopefully we'll be out there building houses in June or July."
This would be the third deal between Royal Oaks and Lancaster, Van Tassel said. Royal Oaks has already purchased lots from Lancaster in Carriage Heights in Fuquay-Varina and Abbington Ridge in Raleigh.
"They're really successful deals for us," Van Tassel said.
Lancaster has developed numerous projects around the Triangle, including the Shearon Farms subdivision in Wake Forest and the Crooked Creek community in Durham.
SunTrust Banks is the largest creditor listed in the Forest Springs and Lyndale bankruptcy filings. The bank lent the companies about $9 million.
In filing for Chapter 11, Forest Springs joins a growing list of residential projects that have run into trouble since the housing market cooled.
Across the road from the Forest Springs property sits 12 Oaks, a golf community with a Jack Nicklaus-designed course that was taken over by a court-appointed receiver last year.
Lancaster's ownership group paid $2.19 million for the Forest Springs property in 2005. The price was eight times the land's assessed value at the time.
Forest Springs lots were originally to be bought byPerry Builders, a Raleigh company that once had a presence in more than a dozen Triangle subdivisions. But Perry has had many of its assets foreclosed on by lenders in recent months.
The Forest Springs site is also just north of land that Kite Realty, an Indianapolis-based real estate investment trust, hopes to turn into a mall with as much as 700,000 square feet of shops.
