Foreclosure nears as judge denies Chapter 11 protection for Mountain of Beverly Hills owner
A judge has denied bankruptcy protection for the owner of the massive tract of land that hit the market last year for $1B
UPDATED, July 25, 3:43 p.m.: A judge has denied bankruptcy protection for the owner of the 157-acre development site known as The Mountain of Beverly Hills, The Real Deal has learned. That decision sets the stage for the property’s foreclosure, one year after it hit the market with the attention and publicity rivaling a Hollywood blockbuster. Instead, it has turned out to be a bomb.
The judge’s order was filed on Thursday, marking a major step in the decades-long dispute over the enormous plot of land, which listed in July 2018 for an astonishing $1 billion.
But the property itself has a far longer and more complicated history, having ensnared the estate of Mark Hughes, along with convicted fraudster Victorino Noval. Even A-listers like Tom Cruise and Steven Spielberg showed a passing interest in purchasing portions of it, according to reports.
As of midday Thursday, The Mountain was still on the Multiple Listings Service for $650 million, after its February massive price chop. Its owner reportedly turned down a $400 million offer last year.
That owner, Secured Capital Partners, filed for Chapter 11 bankruptcy on May 29, a day before the lender could foreclose on four liens attached to the property. Those loans, provided by the property’s previous owner, Mark Hughes Family Trust, tallied around $190 million.
Filing for bankruptcy protection would have allowed Secured Capital more time to reorganize its debt, attorney Ronald Richards said at the time.
But in their June 19 motion to dismiss, attorneys for the Hughes estate, said “It is time for this epic to end.” In their 40-page motion, lawyers detailed why Secured should be denied protection in court.
Among those reasons were allegations that Noval acquired the property improperly, and was using bankruptcy protection as a means to delay foreclosure. It also detailed the way Noval is tied to both the property and to Secured Capital, which is technically controlled by his son Franco Noval.
“The end of the road”…almost
A source familiar with the case said that Secured Capital could attempt to appeal the decision, or transfer the property to another LLC that could then file for bankruptcy protection. It is unclear whether that tactic would even be allowed, however.
“They’re getting real close to the end of the road,” the person said. “It’s dirty and the court is aware.”
An attorney for Secured Capital declined to comment. Lawyers for the Hughes estate did not respond to requests for comment.
Secured Capital acquired the development site — with the liens attached — from Tower Park Properties, also controlled by the elder Noval, in 2016 through a title transfer.
Tower Park had purchased the property from the Hughes estate in 2004. Loans from the Hughes estate funded that purchase, as well as millions more to develop it at a later date, according to recent court documents. Nothing was ever developed on the land.
But then Tower Park, unable to pay back the loans, filed for bankruptcy protection in 2008. Though the loans were in Tower Park’s name, Secured Capital was the entity in danger of losing the entire property given that it acquired the title with those loans.
Last summer, the property gained nationwide attention when it hit the market for a whopping $1 billion. Its asking price was slashed $350 million in February, after its owners reportedly turned down a $400 million offer. Aaron Kirman of Compass still has the listing.