A townhome project in foreclosure in Denver’s Overland neighborhood has filed for bankruptcy.
Montana Village Developers LLC is an entity formed by Denver-based homebuilder RedT to build and sell 19 townhomes in the 2600 block of South Delaware Street. It filed for Chapter 11 protection Oct. 1.
In March, Indicate Capital, a local lender on the project, filed to foreclose on the property, saying RedT had failed to pay off a $8.5 million loan taken out in late 2022.
A similar situation around the same time occurred with another RedT project, this one involving 15 units at 1642 Lafayette St. in City Park West. That foreclosure filing was submitted in April.
RedT owner and CEO Nathan Adams blamed Xcel Energy for the situation, saying the utility provider had failed to hook up the project in a timely manner. That, in turn, derailed plans to sell the units individually, as RedT typically does, Adams said.
He subsequently asked the state’s Public Utilities Commission to investigate Xcel. A handful of smaller local developers wrote letters in support.
In the spring, Adams said he was hoping to sell all the townhomes in each project to a single buyer, who presumably would rent them out. He figured he’d lose $150,000 on each unit compared with selling them individually.
But Adams said last week that he had opted to try to find renters for the units himself.
“Our highest probability of sale and highest price is going to be at stabilization,” he said.
Adams said Thursday that he had three or four leases signed in Overland, and eight or nine in City Park West.
The foreclosure filing for the City Park West project was withdrawn in June, records show.
But foreclosure proceedings continued for the Overland project. Records show Indicate Capital submitted stalking horse bids multiple times in recent weeks, only to pull them and ask that an auction be pushed two weeks out.
Adams declined to discuss why he had Montana Village Developers LLC file for bankruptcy. But he did so one day before a planned auction. As a result of the filing, the property’s foreclosure status is now listed in county records as “on hold.”
Get more real estate and business news by signing up for our weekly newsletter, On the Block.