KINGMAN – A land investment group managed by developer and farming operator Jim Rhodes has filed for bankruptcy in U.S. Bankruptcy Court in Las Vegas with an estimated $35 million to $37 million in principal assets of Mohave County land.
Attorneys for Avery Land Group, a Nevada limited liability company formerly doing business as Kingman Farms, filed a final disclosure statement June 6 in connection with the debtor’s second amended Chapter 11 bankruptcy reorganization plan.
The case has been assigned to Judge August Landis, with U.S. Trustee Edward McDonald appointed to oversee Avery’s business affairs.
An overview of the reorganization plan separates claims against Avery into 15 classes based on their level of priority and the legal nature of the claims.
Avery’s principal assets are listed as 10 parcels of Mohave County land with a value of about $19.6 million; 24 parcels of land with a value of $5.5 million; and six parcels of land with a value between $10.8 million and $12.1 million, received under the debtor’s affiliate, Yucca Land Co.
Stephen McKenna, an investor from Tamarac, Florida, said he owns about 40 acres of land, one of many parcels that Avery had planned for growing pistachios and almonds under the name Quality Nut.
He’s far down on the priority list with a secured claim of $16,633.
“I’ve never been paid for a year and a half,” McKenna said in a telephone interview from Florida. “Land prices have gone up consistently. They walked away and never paid the millions they owed for supplies and vendors.”
McKenna said his name got completely “wiped off” the claim, and that’s when he became concerned.
McKenna’s secured claim was to be paid in monthly installments of principal, together with a non-compounded interest rate of 5.75 percent a year, based on a 30-year amortization schedule.
“I never received my quarterly payments,” he said. “That’s where the red flag was. I called the title company and found out they (Avery) were in bankruptcy. Where do I start?”
A search of Mohave County Assessor records found 23 parcels owned by Avery Land Group, ranging from 40 acres to 640 acres.
“It’s quite a lot. A lot of people are out of their money,” said McKenna, who still has 120 acres in Silverado Ranchos.
Avery Land Group was formed in 2013 as a wholly-owned subsidiary of Kingman Farms to hold investment land. Just before filing for bankruptcy, Avery and Kingman Farms merged to become one entity.
Before the merger, Kingman Farms conducted all development activity on behalf of Avery and its investors holding land in Mohave County. In essence, Kingman Farms acted as the general contractor for Avery, and contracted with material suppliers, equipment companies and other vendors, according to court documents.
As a result, Kingman Farms had claims against Avery and its affiliates for amounts advanced. After the merger, Avery became the entity holding the claims against the affiliates.
Kingman Farms made a strategic decision, based on advice of its counsel, to perfect its water rights and gain a competitive advantage in Mohave County’s agricultural market, according to court documents.
It proceeded to develop wells throughout Mohave County and undertook land development activities, including installing water lines, clearing and grading, and converting the land into crop-ready farm land.
After Kingman Farms incurred debt to develop the wells and the land, the debtors were unable to pay their obligations due to “adverse market conditions,” and were unable to sell the land or obtain financing.
Brett Axelrod, Las Vegas-based counsel for Avery Land Group, said he was “not interested” in commenting on the bankruptcy case. Axelrod filed a monthly operating report on behalf of Avery on July 20, the latest court docket on file.
Several other attorneys filed orders of stipulation on behalf of creditors objecting to the reorganization plan last week. Creditors had until July 18 to vote on accepting or rejecting the plan.
Judge Landis set an Aug. 1 hearing on confirmation of the plan. Although it’s referred to as reorganization, the bankruptcy plan may provide anything from complex restructuring of Avery’s business and obligations to a simple liquidation of its assets.