Grim news for Colorado Crossing creditors

Filed under: Daily News,News |

The 40 or so Colorado Crossing project lienholders who convened last week for their first creditors’ meeting were hoping for some good news.

But with $15 million in assets and $80 million in liabilities, including almost $20 million owed to the general contractors, subcontractors, suppliers and consultants, the likelihood they would be paid anything, let alone paid in full, appeared dim.

The situation grew worse last week after the CEO of SRKO Limited Family Partnership, Colorado Springs resident Jannie Richardson, filed for personal bankruptcy. According to court documents, Richardson’s assets amounted to $4 million while her liabilities totaled $49 million.

A casualty of the worst downturn since the Great Depression, it will be up to a U.S. Bankruptcy Court judge to decide the project’s fate. For now, the massive development, once dubbed “Colorado Springs’ second downtown” sits vacant and unfinished, a sobering remnant of the real estate bubble.

Calls to Thomas Quinn, Richardson’s personal bankruptcy attorney, about why Richardson’s personal debt was so large were not returned. It appears, however, that the developer took out millions in personal loans to keep Colorado Crossing’s first phase afloat.

Her largest personal creditors included Capmark Finance, owed more than $16 million, and retired Colorado Springs banker “Buzz” N.A. Rieger, owed $4.26 million.

Quinn and SRKO attorney Lee Kutner appeared with Richardson at the March 25 hearing in Denver, along with about 15 attorneys representing the lienholders. Also present was Trevor Young, the lawyer representing five local companies that had filed mechanics liens against SRKO.

“There really were no revelations,” he said.

That wasn’t what any of the creditors were hoping for.

In better days

Few would have predicted that the 153-acre project would hit the financial skids.

Located along the Interquest Parkway corridor, near flourishing north El Paso County neighborhoods, the 1.6-million-square-foot hotel-office-retail-residential development promised welcome services and shopping.

What’s more, Richardson was a cash-rich veteran entrepreneur who had developed and owned numerous successful commercial properties in Colorado and California.

Unlike more traditional developers who leveraged their projects, often to maximum levels, she preferred the pay-as-you-go approach.

She was lucky because she was able to fund her own developments — and welcomed small investors, many from her own Korean-American community. As many as 43 family members, including direct relatives, invested in various SRKO projects, though their total exposure was “less then 1 percent,” she said.

But the tides turned.

By mid-2008 Richardson found herself marooned by tight credit. She had already poured tens of millions of dollars in land planning, soils engineering, entitlements, infrastructure and marketing when she set an appointment with a lender who had promised to finance the completion of Colorado Crossing’s first phase.

But by waiting too long, she lost not one, but a series of lenders who either declined to finance the project or to cover her obligations at what she believed were fair terms.

As the economy slid into recession, Colorado Crossing’s appraised value eroded quickly. At one time, the nine-acre first phase with its unfinished multiplex theater, parking garage, two office and retail buildings was worth an estimated $50 million to $60 million, according to SRKO. But that was no longer the case and, by last month, the property’s loan value was closer to $15 million.

G.E. Johnson Construction pulled its crews from the office and retail buildings in September 2008. Remaining construction shut down when Richardson sent crews home in January of this year.

Leery of ‘loan sharks’

What Richardson calls “predatory lenders” offered to give her 20 to 25 cents on the dollar before SRKO filed for Chapter 11 bankruptcy Feb. 10.

“I’ve had offers from loan sharks who just want to loan to own my property — not to pay off my liens,” she complained.

Richardson still holds out hope of some kind of miracle.

“Seventy percent of the subcontractors got along with me. Thirteen companies worked with me until the very end. They’ve tried to help in lots of ways.”

She said she had counted on continued support from G.E. Johnson.

“They are big enough that they could just write off the loss, but their subcontractors couldn’t,” she said.

She said her ability to stay current on accounts payable was diminished when the contractor pushed to complete work on its project months ahead of schedule.

“Because of the economy, they could bring in extra crews. I needed more time; I was running out of my own money and planned to get financing, but it was too late.”

G.E. Johnson’s Jim Johnson said he had tried to work with Richardson on a plan to pay him almost $9 million owed to the company, but her offer to trade land in lieu of payment wasn’t realistic.

“The land she offered was now valued at fraction of what was owed. It just didn’t work for us,” he said.

An outside investor?

Under Chapter 11 bankruptcy rules, no one will get paid until the court approves a reorganization plan. At this point, there is little or no money to distribute. But SRKO still controls plenty of land.

Trading land for debt, however, might not be an option.

“Our group of subs does not want the property. If it was just us, it might work, but there are so many other liens and encumbrances,” Johnson said, adding that navigating layers of claimants would be too difficult.

He said if Richardson is ultimately unable to pay her obligations, an outside investor might be the answer.

“We’d look for them to assume ownership and clean things up,” Johnson said.

Karl Berg, another attorney also representing some of the subcontractors, said his clients might end up losing more if a third party entered the picture.

“If a new investment group takes over at the 11th hour, they’d be in first position. That would trump all secured creditors,” he said.

Yet with so few options available to her, Richardson said she hopes a buyer for the project steps up.

“I wanted Colorado Crossing to be a win-win for me and for the city. I wanted to bring jobs and new companies, but I never realized how bad the economy would be.”

The SRKO Limited Family Partnership owes about $20 million to its creditors. The following is a list of those with a Colorado connection:

SRKO’s SECURED CREDITORS*

AMOUNT OF CLAIM**

3D Web Media, Boca Raton, Fla.

$ 9,890

ABC Supply Co., Denver

721

Banner – Denver

55,607

Barton Supply – Aurora

123,852

Bible Electric – Colorado Springs

690,121

Big Horn Plaster — Littleton

132,586

Blueprints, Inc.– Colorado Springs

26

Brickstone – Arvada

146,668

C&C Sand and Stone – Colorado Springs

153,824

Carlson Systems, Inc. – Omaha, Neb.

1,310

Colorado Doorways — Denver

56,557

Colorado Machinery – Pueblo West

2,557

Concepts – Colorado Springs

9,610

Concrete Management – Littleton

2,768,682

Consolidated Electrical Distributors – Denver

26,356

CPS Distributors — Westminster

30,078

CSV/Volvo Rents – Colorado Springs

33,775

Denver County Treasurer – tax lien

2,336

Douglass Roof – Commerce City

382,510

Drake Williams – Greenwood Village

2,135,582

E Light

498,996

Eddie Bishop – Colorado Springs

53,500

Entech Engineering – Colorado Springs

136,008

Firebaugh Precast – Colorado Springs

2,491

Front Range Redi-Rock – Colorado Springs

91,534

Gardner Signs — Longmont

39,813

G.E. Johnson – Colorado Springs

8,400,000

General Ceiling and Partition – Colorado Springs.

488,737

Glover Masonry — Arvada

482,559

Grace Sealants – Colorado Springs

33,409

Grainger – Colorado Springs

4,123

Gypsum Products – Colorado Springs

10,900

H&E Equipment – Colorado Springs

46,393

Harding Nursery – Colorado Springs

45,161

Herbian Insulation — Arvada

45,855

Honeywell, Inc./Novar – Tempe, Ariz.

17,599

Horizon Glass – Denver

244,944

Interstate Mechanical — Elbert

70,000

J.C. Jones – Colorado Springs

78,138

Ken Caryl Glass — Littleton

33,750

KWAL Paint — Denver

154,709

LaFarge – Colorado Springs

455,375

LPR Construction – Loveland

240,838

LSC Transportation — Denver

$ 14,246

Mechone, Inc. – Colorado Springs

129,762

Midwest Arricade – Colorado Springs

1,606

NES, Inc.—Colorado Springs

75,784

Obermayer Rebmann — Philadelphia

3856

Olson Plumbing – Colorado Springs

1,121,919

Onsite Lighting & Survey – Buffalo, Minn.

33,643

Otis Elevator – Colorado Springs

120,831

Overhead Door – Colorado Springs

11,236

OZ Architects – Boulder

404,937

Pacific Coast Supply — North Highlands, Calif.

23,884

Parker Steel — Parker

25,076

Penton Media — Chicago

4,036

Perkey Steel — Colorado Springs

278,378

Pikes Peak Steel – Colorado Springs

5,825

Powers Thermal Insulation – Colorado Springs

82,079

R&R Engineers — Denver

1803

Rampart Supply – Colorado Springs

6,356

Regency Lighting – Van Nuys, Calif.

16,380

Rial Heating & Air Conditioning – Colorado Springs

219,969

Rio Grande — Denver

980,672

RK Mechanical — Denver

250,438

Rockwell Consulting – Colorado Springs

83,735

Rolling Plains – Henderson

61,474

Schuman Communications – Colorado Springs

70,722

Sherman & Howard – Colorado Springs

2,623

Sherwin Williams – Colorado Springs

1,043

Simplex Grinnell – Colorado Springs

201,646

Smelker Concrete – Colorado Springs

1,500

Stresscon – Colorado Springs

1,859,886

Superior Roofing — Aurora

18,445

Taylor Fence – Colorado Springs

7,649

Thyssen Krupp – Colorado Springs

125,576

Top Quality Drilling — Northglen

16,831

Transit Mix – Colorado Springs

1,268,619

Tropwen Enterprises – Colorado Springs

1,803,795

U.S. Metals — Denver

7475

Whitecap — Chicago

24,007

Windsor – Colorado Springs

197,685

World of Tile — Englewood

8,073

*Value of property subject to lien = $15 million ** Rounded to nearest dollar.

Personal bankruptcy filing

Statement of financial affairs and schedules

2 Responses to Grim news for Colorado Crossing creditors

  1. The author takes a very soft approach with Jannie… The fact is she Stole from all those listed above. It wasn’t “loan sharks” and preditary lending, it was greed, incompitence, and a concious choice not to pay that has caused her train wreck.

    Blaming the economy in this case doesn’t cut it and those of us who were there know that. She was her own worst enemy , micro managing while losing sight of the storm that was about to descend upon the Market and telling us back in June of ’08 that she was going to let Johnson go because she could build it cheaper with her”guys”, i.e.illegals

    Eddie
    April 3, 2010 at 3:18 pm

  2. This article is mostly erroneous.

    Richardson’s filing for personal bankruptcy should not affect the validity, standings, or priority of the SRKO Limited Family Partnership creditors and lien holders. The partnership is a separate entity. What it can mean is that if any – if any – monies are due to Richardson from the SRKO Limited Family Partnership, they will be directed to Richardson’s creditors and lien holders. Richardson is attempting to protect her personal assets. Even this article states “Those liabilities are above and beyond SRKO’s.” This shows the separation of the two.

    Completely inaccurate statement in the article. “What’s more, Richardson was a cash-rich veteran entrepreneur who had developed and owned numerous successful commercial properties in Colorado and California. Unlike more traditional developers who leveraged their projects, often to maximum levels, she preferred the pay-as-you-go approach.” DURING THE PAST YEAR ALONE, RICHARDSON HAS LOST ALMOST 20 PROPERTIES TO FORECLOSURES OR HAS TURNED PROPERTIES OVER TO LENDERS IN LIEU OF FORECLOSURE. She does not “pay-as-you-go”. If Richardson, SRKO, Noah LLC, Jessica LLC, and other Richardson controlled companies did endorse the “pay-as-you-go” philosophy, they would not have numerous lien holders and lenders filing court actions. Richardson would not be filing for bankruptcy protection.

    bill
    April 5, 2010 at 7:41 am