Park Pointe owner files for bankruptcy

Despite assurances two months ago that "all systems are go," Park Pointe owner Wellington Park Pointe LLC has filed for Chapter 11 bankruptcy on Nov. 2 in U.S. District Court in Tacoma.

The U.S.-registered group of Canadian investors sought protection from creditors as they try to reorganize their finances. The filing comes as Seattle-based Regal Financial Bank — to whom the group owes nearly $12 million in loans — was preparing to auction the Park Pointe property in Seattle on Nov. 6. The auction has now been postponed until Dec. 18.

Last June, Wellington defaulted on the loan to Regal as they sought to renegotiate the terms of debt. According to court records, it holds $29 million in assets but owes about $15 million in liabilities.

Wellington's bankruptcy attorney Christine Tobin was unavailable and company Vice President Rob Slater could not be reached for comment.

News of Wellington's collapse comes as the City of Issaquah has finally completed a near-decade long Environmental Impact Study (EIS) that would allow the developer to move forward on applications to subdivide the land.

Senior Planner Christopher Wright said the city could still move forward with the application, but that didn't mean something would be built there.

"We have applicants that go throught the planning process and then for whatever reason they don't move forward," he said. "They speculatively go through the process."

Cascade Land Conservancy spokesperson Steve Dunphy, who criticized the Park Pointe proposal in the past, said that given the market these days aren't surprising anymore.

"It's hard to say what that means," he said.

"They're probably looking at how it's penciling out — and not a lot of people can afford to buy homes right now."

Wellington's bankruptcy also has implications for Regal Financial as well. The Wellington loan could triple the company's write-offs this year. Regal's practices have drawn scrutiny in Washington, D.C. as federal regulators issued cease-and-desist orders Oct. 30 for engaging in "unsafe or unsound" banking practices. The Federal Deposit Insurance Corporation (FDIC) ordered the bank to find qualified management — including a new CEO — and imposed deadlines to boost capital levels and figure out how to better buffer losses from bad loans.

Regal spokesperson Alice On was also unavailable for comment.