The latest documents filed in the Homestead Northwest bankruptcy case indicate that little, if any, money will be available from the failed real estate development firm to pay investors and other creditors.
But the full extent of the Lynden-based development company’s debts and investors’ losses won’t become clear until all Homestead-related companies have filed their own bankruptcy documents and disclosures, said attorney Diane Veltkamp of Mukilteo.
Veltkamp handled the Jan. 18 bankruptcy filing of Homestead NW Development Co., one of several Homestead companies controlled by founder and president Jim Wynstra. Veltkamp said she expects an attorney representing the rest of the Homestead companies to file a separate bankruptcy case to bring those firms and their debts and assets under the supervision of the U.S. Bankruptcy Court in Seattle.
The Jan. 18 Homestead NW filing was fleshed out Feb. 1 with documents listing the firm’s creditors, the amount they are owed, and the company’s assets.
There isn’t much good news for creditors. Homestead NW claims ownership of about $3 million worth of Whatcom County real estate, nearly all of which is the Scholten Shores subdivision off Bartlett Road near Wiser Lake along Guide Meridian. But its debts total $13.6 million.
Homestead NW also reports a loss of $4.1 million for 2011.
Wynstra and Homestead Northwest Inc. companies raised an estimated $121 million from investors from 1989 until 2009, according to an April 2011 statement of charges filed by the Washington Department of Financial Institutions. Many of those investors were repaid over the years, but the state agency estimated that $60 million or more was still owed as of April 2011.
The state’s civil action contended that Wynstra lured investors with promises of high rates of return. Those promises apparently were kept until April 2009, when the nationwide real estate boom collapsed and interest payments stopped. The state contends that Wynstra failed to register the investments as the law requires, and he misled investors about the financial health of the company, particularly in the year leading up to the April 2009 suspension of payments to investors.
Many investors thought their money had been secured with a deed of trust on real estate that Wynstra and his companies expected to develop as subdivisions, condos or resorts. But when they tried to collect, they discovered that the company had in some cases issued multiple deeds of trust on the same pieces of real estate.
The latest bankruptcy filing lists about $1.7 million in secured debts to seven investors, but attorney Veltkamp said the depressed value of the real estate that secured those investments likely means they won’t get much, if any, of their money back.
One of those investors, Robert Van Weerdhuizen of Everson, had filed a foreclosure notice on several parcels securing his $600,000 investment in Homestead. In the legal notice scheduling the sale, Bellingham attorney Mark Lee accuses Homestead of “burdening of the property with additional deeds of trust.”
Whatcom County property records provide evidence that supports the allegation. Lee did not respond to a phone call requesting comment.
The bankruptcy filing suspends foreclosure on a debtor’s assets, at least temporarily.
The filing also lists 145 firms and individuals as unsecured creditors. Some appear to be building suppliers and contractors owed relatively small sums, but others are individual investors owed hundreds of thousands of dollars.
The largest single creditor listed is Westside Building Supply of Lynden, owed about $992,000. The bankruptcy filing indicates this debt was incurred in December 2009, several months after Homestead’s financial problems forced suspension of interest payments.
Westside owner Bernie Bovenkamp did not respond to a phone call seeking comment.
Since the state filed its civil action, Wynstra has sold some properties and deeded others to investor groups, according to Whatcom County property records. The highest-profile transaction was the $3.2 million sale of Birch Bay Water Slides in September 2011.
Until the rest of the Homestead-related companies file their financial statements in the bankruptcy court, it won’t be clear how many investors got some or all of their money back in the past year.
Wynstra and his company played an important role in Lynden and the Pacific Northwest over the years. He spearheaded a variety of development projects that turned the town of Lynden into a Dutch-themed village and a tourist destination. In spring 2010, Homestead sold its flagship Homestead Farms golf resort, and that facility is no longer controlled by Wynstra.
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