Whittaker Corporation Seeks Declaratory Relief in Santa Clarita Bankruptcy, Alleging Subordination Claims of $35 Million
March 7, 2022, District of Arizona – Plaintiff Whittaker Corporation initiates a complaint against Blue Ox Holdings, LLC, Michael W. Carmel, in his capacity as Chapter 11 Trustee of Debtor Santa Clarita, LLC, and thirty unnamed defendants, alleging subordination claims involving lien and loan amount totaling $35,000,000.
The complaint alleges that the Debtor was allegedly formed to acquire approximately 972 acres of undeveloped land located at Santa Clarita. Plaintiff argues that Debtor and Whittaker allegedly executed an agreement for the purchase/sale of a property, and as a condition precedent for Debtor to purchase the property, the Debtor allegedly asked Whittaker to enter a loan agreement with Porta Bella Lender, LLC (“PBL”) in the alleged principal amount of $35,000,000 (the “PBL Loan”). Whittaker further contends that it also later entered into a subordination agreement with Debtor with the understanding that the PBL Loan would be used to remediate the property, and hence it agreed to subordinate the Whittaker deed of trust to the $35 Million PBL deed of trust. Subsequently, the PBL note, loan agreement, and deed of trust were purchased by Blue Ox, who filed proofs of claims.
The complaint asserts that Whittaker allegedly agreed to subordinate its senior lien to PBL based on the understanding that its subordinated interest in the property would be protected by limiting interest accrual on the principal balance of PBL loan to twenty-five percent (25%), per annum, non-compounded. The complaint further asserts that Whittaker allegedly did not contractually subordinate to the total amount of the debt stated by Blue Ox as senior debt. Plaintiff contends that Blue Ox allegedly improperly and unilaterally modified the PBL loan and never informed Whittaker of the modifications to the PBL Loan agreement or the Whittaker/PBL subordination agreement. Accordingly, the complaint argues that Plaintiff’s interest in the property through the Whittaker deed of trust is superior to that of Blue Ox, and Plaintiff is entitled to a declaration that its interest is superior and not subject to the claim by Blue Ox.
In re Santa Clarita, LLC, Case No. 2:20-bk-12402-MCW