Under pressure from a lender, a major local developer filed Monday for personal Chapter 11 bankruptcy protection.
George “Buddy” Sowers personally guaranteed tens of millions of dollars in land development loans on a stalled 1,300-acre real project in Chesterfield called Roseland.
Now Sowers has sought protection for himself and his wife while two business entities that own the project’s land work their way through bankruptcy reorganizations.
The personal filing by Sowers and his wife, Jacqueline Richards Sowers, follows that of G.B.S. Holding Ltd., which owns 945 acres in the development, and Roseland Village LLC, which owns 342 acres of the project.
G.B.S. filed for Chapter 11 in early June. Roseland Village filed in January.
“The personal filing is simply about the guarantees of business loans,” Sowers said by phone Monday. “A lender has chosen to pursue all its rights and remedies, including the personal guarantee on a large corporate loan.”
According to the filings, the acres owned under Roseland Village are worth approximately $42.95 million. That entity owes about $20 million to lenders and other creditors. The land owned by G.B.S. is valued at about $44.47 million, and G.B.S. owes about $23.3 million.
The banks listed in the filings include millions owed to Essex Bank, C&F Bank, Central Virginia Bank, Franklin Federal Savings Bank, M&T Bank, Paragon Commercial Bank and Virginia Commonwealth Bank.
But it was the recent dealings with one of those banks in particular that pushed Sowers toward filing for Chapter 11.
Troy Savenko, an attorney with Kaplan Frank who is representing the Sowerses, said the bankruptcy came after a creditor initiated a lawsuit to enforce its rights against Sowers as a guarantor.
“The bankruptcy stops the lawsuit and prevents that creditor from taking judgment,” Savenko said.
Sowers declined to comment about which of the development’s lenders wanted to collect from him personally, although Franklin Federal Savings Bank sued G.B.S. Holding and Sowers in May to try to collect on a $4.97 million loan.
How the Sowerses’ bankruptcy plays out is tied directly to how successful the two entities are at getting development going once again at Roseland.
Sowers and his team have been working a plan of reorganization for G.B.S. and Roseland Village that includes potentially selling off pieces of land, starting construction or partnering with outside parties to get things up and running again.
Sowers said there is some action on that front.
“I’m confident that both Roseland Village and G.B.S. Holding will emerge through the reorganization in good shape,” he said. “In fact, I expect we’ll begin development of some of the strategic portions of the Roseland development in 2012. We’ll do some perhaps on our own and perhaps some ventures with others.”
Savenko said the personal bankruptcy filing is not an example of a developer trying to protect any sort of extravagant free-wheeling lifestyle while his business sours.
“All of the Sowerses’ personal, non-business obligations are current,” Savenko said. “This isn’t a situation where they’ve been carrying on as though they’re oblivious to what’s happening with the economy. The Sowerses’ bankruptcy schedules will make that abundantly clear.”
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
Under pressure from a lender, a major local developer filed Monday for personal Chapter 11 bankruptcy protection.
George “Buddy” Sowers personally guaranteed tens of millions of dollars in land development loans on a stalled 1,300-acre real project in Chesterfield called Roseland.
Now Sowers has sought protection for himself and his wife while two business entities that own the project’s land work their way through bankruptcy reorganizations.
The personal filing by Sowers and his wife, Jacqueline Richards Sowers, follows that of G.B.S. Holding Ltd., which owns 945 acres in the development, and Roseland Village LLC, which owns 342 acres of the project.
G.B.S. filed for Chapter 11 in early June. Roseland Village filed in January.
“The personal filing is simply about the guarantees of business loans,” Sowers said by phone Monday. “A lender has chosen to pursue all its rights and remedies, including the personal guarantee on a large corporate loan.”
According to the filings, the acres owned under Roseland Village are worth approximately $42.95 million. That entity owes about $20 million to lenders and other creditors. The land owned by G.B.S. is valued at about $44.47 million, and G.B.S. owes about $23.3 million.
The banks listed in the filings include millions owed to Essex Bank, C&F Bank, Central Virginia Bank, Franklin Federal Savings Bank, M&T Bank, Paragon Commercial Bank and Virginia Commonwealth Bank.
But it was the recent dealings with one of those banks in particular that pushed Sowers toward filing for Chapter 11.
Troy Savenko, an attorney with Kaplan Frank who is representing the Sowerses, said the bankruptcy came after a creditor initiated a lawsuit to enforce its rights against Sowers as a guarantor.
“The bankruptcy stops the lawsuit and prevents that creditor from taking judgment,” Savenko said.
Sowers declined to comment about which of the development’s lenders wanted to collect from him personally, although Franklin Federal Savings Bank sued G.B.S. Holding and Sowers in May to try to collect on a $4.97 million loan.
How the Sowerses’ bankruptcy plays out is tied directly to how successful the two entities are at getting development going once again at Roseland.
Sowers and his team have been working a plan of reorganization for G.B.S. and Roseland Village that includes potentially selling off pieces of land, starting construction or partnering with outside parties to get things up and running again.
Sowers said there is some action on that front.
“I’m confident that both Roseland Village and G.B.S. Holding will emerge through the reorganization in good shape,” he said. “In fact, I expect we’ll begin development of some of the strategic portions of the Roseland development in 2012. We’ll do some perhaps on our own and perhaps some ventures with others.”
Savenko said the personal bankruptcy filing is not an example of a developer trying to protect any sort of extravagant free-wheeling lifestyle while his business sours.
“All of the Sowerses’ personal, non-business obligations are current,” Savenko said. “This isn’t a situation where they’ve been carrying on as though they’re oblivious to what’s happening with the economy. The Sowerses’ bankruptcy schedules will make that abundantly clear.”
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
So apparently, that “personal guarantee” is not being guaranteed, lol.
as some know a guaranty is not worth the paper its written on when that guarantor is weak financially. step up and honor your guaranty but don’t file for BK. sad to say but this developer will never develop again as his story/history is now tainted. he will now probably spend more time fishing in Flordia on a big boat that’s now protected under BK
Once again, this is bad faith. If people continue to bail on their “personal guarantees,” then the rest of us can forget about getting loans in the future. This is just like the Fergusons bankrupting their businesses that they put up as collateral or Justin French and all his shenanigans. Man up, Sowers.
It’s amazing how so many people, like the three posting before me, have zero clue what they’re talking about when they open their yaps about development. Roseland began as a project in 2007. At that time, when the housing market was moving and NO ONE had a clue about where it was going, every one of these banks saw these loans as good investments. They could have turned Sowers down, BUT THEY DIDN’T. No one strong-armed them into making the loans. Roseland is an exceptional project. Banks were lining up to invest in it. And the people posting here blame… Read more »
I have been through it. Mr. & Mrs. Sowers will not get a free ride, but a decade of pain. The banks will will have no pity and will win in court. But everyone loses.
Good luck to you, Mr. Sowers. Been there, done that during the ’90’s. Put 11 in Chapter 11, brought 9 out. It’s not easy but not impossible especially when your family hangs in there w/you!
@James – Huh? Your analysis has nothing to do with my, Cindy’s, and Todd’s comments. All three of us seem to have a problem with someone putting up some form of collateral (in this case, a “personal guarantee”) and then finding a way to renege on that. I have some sympathy for those who got caught in the downturn; however, that does not justify a mal-foi move like this. Banks may have been lining up to dole out loans, but part of the attractiveness of such financing (from the lenders’ standpoint) probably had something to do with the so-called “personal… Read more »
Ethan – I don’t think you totally understand commercial law with regard to loans and guarantees. Chapter-11 bankruptcy isn’t designed to allow a creditor to renege on obligations. Rather it puts a hold on quick-fire actions like judgements while a judge allows a plan to be put into place in an orderly and methodical fashion. With that being said, what are you thinking trying to link up the business of the Ferguson’s or my father to Justin French? I don’t know the Fergusons but understand them to be some of the most philanthropic and well respected people in Richmond. For… Read more »
Casey – I’m afraid that I do have a very good understanding of commercial law. I stand by my opinion/assessment of the use of bankruptcy by a borrower to shirk obligations of a loan. Nevertheless, I apologize for the French comparison. I wasn’t trying to be mean-spirited, and I’m sorry it came across that way.
The Fergusons may be nice, philanthropic people, but they lived beyond their means and turned to bankruptcy instead of “losing” assets that were supposedly pledged as loan collateral.
This is all very unfortunate. Another example of a developer who way overreached their abilities, and now people down the food chain will suffer and be lucky if they ever get paid. Now we have unfinished neighborhoods to go along with the vacant buildings at places like Cloverleaf. And if portions of Roseland get sold off, how will the ‘low impact” and supposedly environmentally sound aspects of the project ever be cohesive or be enforced as promised? Its time to be held accountable for one’s promises.
I have nothing to add about the bankruptcy but I will say that it’s sad to see this happen to Roseland, which offered vastly more attractive and authentic architecture–particularly at its Hallsley subdivision–than we’re used to seeing in the more typical ‘McMansion’ tract homes which litter our landscape.
“I wasn’t trying to be mean-spirited, and I’m sorry it came across that way”- Understood, as the ability to say what you mean is a facility ordinarily associated with those who know of what they speak. Regrettably, your crassness is probably a result of poor breeding… my condolences. This is a local developer (apparently the Copernicus of Chesterfield because his ideas are clearly before their time) working with local businesses to help solve an inescapable local problem, namely, the repugnant repetitiveness and ugliness of exurban sprawl. As Marsha commented, it is sad, if only because so many are unable to… Read more »