In re SR Real Estate Holdings, LLC
Opinion
Lead Opinion
Latham, J.
MEMORANDUM DECISION AND ORDER DISMISSING CASE
For the following reasons, the court finds that Debtor’s case was filed in bad faith and so dismisses it.
Background
The material facts in this case are not in dispute. In June 2000, Blackhawk Financial Corporation (“Blackhawk”) lent Sargent Ranch, LLC (“Sargent”) $15 million at a 15% non-default interest rate. Adams Deck ¶ 14, ECF No. 5; Debtor’s Req. for Judicial Notice, Ex. 3, ECF No. 86-4. Sargent used these funds to purchase 6,400 acres of undeveloped real property near Gilroy, California (the “Property”). Adams Deck ¶ 14. It planned to develop the Property for a variety of residential, industrial and commercial uses. Adams Deck ¶ 12. And Sargent encumbered the Property with a first deed of trust to secure the loan. Adams Deck ¶ 14. Later, in November 2000, Blackhawk increased the loan’s principal amount to $25 million. Adams Deck ¶ 14. Blackhawk also issued a second loan to Sargent for another $15 million, this time apparently at a 31% interest rate. Adams Deck ¶ 15. A second deed of trust on the Property secured this second loan. Adams Deck ¶ 15. Black-hawk then fractionalized 1 both loans and sold individual interests in…