The DIP Facility was negotiated at arms' length, following months of negotiations between the debtors and Credit Suisse. Funds advanced under the DIP Facility will bear payment in kind ("PIK") interest at 2.00% per annum, plus interest at LIBOR plus 750 basis points assuming there has been no event of default.

In requesting the DIP financing, the master developer said lenders are owed "substantial amounts that have been in default for a considerable period of time," as well as the City of Henderson, the residents and homeowners' associations at the development, the debtors' employees, and the debtors' vendors, many of whom have recorded mechanics' liens against the Development. Among other things, the Debtors need to begin repairs on the bypass pipes under the lake as soon as possible, and must pay outstanding assessments due to various property and homeowners' associations, so that these associations can meet their obligations to residents of the Project. The Debtors also require funds to maintain and operate their three Golf Courses; to purchase inventory and supplies for the Debtors' ongoing business operations, and to pay the payroll for the Debtors' over 260 employees.

Lastly, the Debtors need financing to preserve and commence the process of planning and developing Phase 3 or the Project, one of the debtors' most important assets because the majority of the debtors' revenues have or will come from the sale of land to developers. In addition, while the Debtors believe they will eventually be able to realize a profit from the sale of land to developers, such sales cannot be achieved without substantial new capital investments.

"With all of these expenses and the Debtors' limited ability to generate revenues, it is impossible for the Debtors to operate on cash collateral alone, and the Debtors have been unable to obtain sufficient financing outside of chapter 11," states the filing.

Although the Development encompasses almost 3,600 acres, much of the land is undevelopable because of hills, mountains, canyons and other natural topographic features. There are approvals for the construction of over 9,000 residential units at the Lake Las Vegas. Over 1,600 residential units have been built so far, comprising custom and merchant-built homes, town homes and condominium/hotel units. The Development also includes real property yet to be developed that could accommodate residences, resort hotels, casinos, commercial uses and a fourth golf course.

Having previously sold much of the available land pre-petition to homebuilders and other third parties, the Debtors still own approximately 615 net developable acres. In addition to the debtors' development activities, they operate three 18-hole championship golf courses with clubhouses and also manage the Master Property Owners Association, which is comprised of property owners in all Phases that maintains roadways, common areas and open spaces, the lake, the dam and other areas throughout the community. It also maintains private infrastructure, community patrol service, and administers the debtors' design guideline review process to ensure that all structures reflect appropriate standards.