Bluffton development Hampton Lake files for bankruptcy

cconley@islandpacket.comApril 30, 2013 

Hampton Lake LLC, the parent company of the 900-acre Hampton Lake development in Bluffton, has filed for Chapter 11 bankruptcy.

The April 29 filing lists more than $48.4 million in liabilities, including millions owed to investors who paid between $200,000 and $809,000 in 2005 and 2006 to launch the project.

The company also lists $23.3 million in assets, including about $520,000 in cash and investments and the value of 235 unsold lots in the community off Bluffton Parkway.

Company spokeswoman Maria Aselage said the filing was a response to lawsuits filed by two of those initial investors, identified in the filing as Joshua Tillman and Caravel Properties in Nashville, Tenn., and Jon Morris of Bluffton.

"Hampton Lake, LLC officials knew a judgment against them could halt future and pending home sales and could put employees out of work," Aselage said in a news release. "This reorganization plan will help ensure Hampton Lake will continue to its successful completion."

Copies of the lawsuits, both filed in Beaufort County court, were not immediately available. Reached by phone Tuesday, Morris declined to comment.

Aselage said the company's employees won't be affected by the bankruptcy declaration.

Pratt Reed, president of Hampton Lake, said in an email to local interests that the bankruptcy filing would have little effect on them.

"This reorganization effort was done to clean up an internal investor issue," the email said. "Nothing has changed for you. All available properties are still on the market and the related commission structure will be paid as usual."

The company blames its financial situation on the real estate crash of the late 2000s, which devalued lots in the development. Hampton Lake includes about 700 homesites surrounding a 165-acre, manmade lake.

"Due to the real estate crash in the late 2000s and the limited number of lots still available for sale, officials with Hampton Lake LLC came to the realization that they would not be able to pay back the loan principal to these initial investors," the release says.

Lots are now listed for sale from about $40,000 to $80,000, and combined land and homes are available from the mid-$200,000s, according to the development's website. It wasn't immediately clear Tuesday how many homes have been built, although the release says 50 are under construction.

The bankruptcy filing lists nearly 70 initial investors from around the U.S. They include many well-known people from Bluffton, Okatie and Hilton Head Island, who paid $202,168, $404,336 or $808,672 for shares in the development. It's not clear how much of that money, if any, will be recovered.

Scott Middleton, the company's chief financial officer, says the bankruptcy filing means all investors will be treated equally. The bankruptcy plan will require a judge's approval.

Other creditors include the Newport Beach, Calif., firm Sabal Financial, which holds mortgages worth nearly $19.5 million on the 235 unsold lots. The town of Bluffton holds letters of credit for future infrastructure work in the community valued at about $403,800.

"Developer Reed indicated that in his filing he has placed additional monies to complete the Hampton Lake road project," town manager Anthony Barrett said in an email. "If the bankruptcy judge accepts the plan, then there will be additional dollars to complete the roads."

The filing also shows that the company's monthly expenses of nearly $687,000 exceed its income by about $52,000. Its largest monthly expense is a $284,289 payment to Sabal Financial. Payroll accounts for $27,649, according to the filing.

John Reed, CEO of the Reed Group, which developed Hampton Lake in addition to Colleton River Plantation, Belfair, and other high-end Bluffton developments, declined to comment on the bankruptcy.

G. William McCarthy Jr. of the McCarthy Law Firm was hired in November to complete the bankruptcy proceedings, the filing shows. Attempts Tuesday to reach him for comment were not successful.

Related content

  1. Reed to manage Hampton Lake sales, Sept. 12, 2011
  2. Bluffton's Hampton Lake wins national award, Jan. 21, 2009

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