At least two of the largest lienholders in the Colorado Crossing development fiasco have discussed the possible takeover of the project from developer Jannie Richardson.
Jim Johnson, the CEO of G.E. Johnson Construction, of one of the companies owed money in the project’s collapse, said no firm plans have emerged from the talks but that his company and Stresscon, a concrete company, have held preliminary sessions on the idea.
“There have certainly been discussions but no business plan has been put together — no one has been tasked with that job,” he said.
Still, the idea that G.E. Johnson, one of the biggest players in the construction field in the Springs, might step in to take over the northern Colorado Springs project is sure to inject a measure of optimism is a deal that has tarnished Richardson’s reputation and left G.E. Johnson and 39 smaller contractors and suppliers with $31 million in unpaid invoices.
Bob Cope, a city senior analyst, said he, too, has met with Richardson and, separately, with Johnson to explore the city’s role in what might be done to save the project.
Johnson, whose company is owed $8.4 million, said his main concern is that Colorado Crossing’s creditors see a resolution soon.
Stresscon President Mike Norwood didn’t return calls this week.
Stresscon built the 1,000-car parking garage adjacent to an unfinished movie theater at Colorado Crossing and says it is owed $1.84 million for its work.
Richardson and her company, the SRKO Family Limited Partnership, are expected to file a Chapter 11 reorganization plan by Tuesday with the U.S. Bankruptcy Court.
It won’t be soon enough for the lienholders who been waiting since September 2008 for payment.
The two sides, stymied when financing could not be found to complete the project’s nine-acre first phase, are in the midst of some serious legal wrangling.
Richardson’s company has been operating as a “debtor-in-possession” under the protection of the bankruptcy court.
Under that umbrella, she is free from creditor actions such as lawsuits and asset seizures. She can also pursue funding to pay her creditors and to continue work on the 153-acre mixed-use project — something she said she wants to do.
“I have to get out of bankruptcy, but I don’t want a grand opening (at Colorado Crossing) owing so many people. I need the time to work it out,” she told the Business Journal last week.
At the same time there’s a drumbeat rising for a faster resolution coming from some of the companies she owes. They want payment, but don’t necessarily want Richardson to secure funding that could position a lender’s claim ahead of their own.
G.E. Johnson and Stresscon have asked the court to appoint an independent trustee.
The companies jointly filed a motion on July 30 asking the bankruptcy court’s help in overseeing SRKO’s Chapter 11 reorganization. They alleged mismanagement and fraud in an effort to force Richardson to move more quickly to settle the claims against her company.
Some creditors would like to force Richardson into Chapter 7 bankruptcy. Such a move would allow the court to order the sale of SRKO’s assets in order to pay off the creditors. It could also dissolve a 1.6 million-square-foot real estate empire that was once expected to generate millions of dollars in sale tax revenues for the city.
The G.E. Johnson-Stresscon motion, however, isn’t in favor of liquidation, suggesting the better route is by stabilizing the project.
In response to the companies’ motion, SRKO attorney Lee Kutner filed an objection that raised questions about the creditors’ motives and the accuracy of their allegations.
“The motion is but the latest in the never-ceasing attempts of G.E. Johnson and Stresscon to attempt to discredit the Debtor (Richardson) and impede the Debtor’s effort to reorganize,” he wrote.
His objection also said a plan is being developed to “provide for” the project’s sale or development at some point.