Skip to Content

Provo student-housing project files Ch. 11 bankruptcy

(Daily Herald) Joaquin Village, a proposed student housing project in northeast Provo that's been on hold for more than a year, may remain a field of weeds indefinitely.

A dispute over financing for the construction of Joaquin Village resulted in its developer filing for Chapter 11 bankruptcy protection last month to block a partner from foreclosing on the 5-acre land parcel.

Joaquin Development, which is managed by Wayne Ross, president of Arrowstar Construction, claims it was forced into bankruptcy after Peak Capital Partners allegedly duped the developer into thinking it was making an equity investment when it provided $12 million in project financing.

The proposed 236-unit project is supposed to replace Joaquin Elementary School in the block between 500 North and 600 North and 500 East and 700 East. The school was torn down in preparation of Joaquin Village's construction, but then the recession deepened and the developer lost its funding.

When discussions with Zions Bank and other lenders for construction financing for Joaquin Village collapsed in the wake of the deepening recession last year, Peak decided to "claim its rights as a creditor" and foreclose on the project, according to documents filed by Joaquin in U.S. Bankruptcy Court.

"We don't believe Peak has the right to foreclose on the property because they're an owner of the project, not a lender," said Stephen Stoker, the developer's bankruptcy attorney. "We're seeking a court order to recharacterize Peak's claim to that of owner rather than a lender."

Attorneys for Peak disagreed, saying the $12 million investment is a loan and is secured by a deed of trust, and that it has the right to foreclose on the property because Joaquin failed to obtain construction financing of up to $48 million by Oct. 31, 2008 to complete the project, and also failed to make interest payments since January.

Original Article