The filing came shortly after Plise was unable to come to terms with one of the lenders, Community Bank of Nevada, a subsidiary of publicly held Community Bancorp, which threatened to initiate foreclosure proceedings. The bankruptcy filing is preventing foreclosure while City Crossing refinances its debt, which matured on April 1 and totals approximately $168 million, including $26 million from Community Bank, according to court documents.

The debt was obtained for the land associated with the project, according to court documents. In seeking approval to enter Ch. 11 bankruptcy, City Crossing LLC says that given the financial wherewithal of William Plise, who personally guaranteed the debt, and the existing equity in the land--it was valued at $240 million in April--the successful reorganization of the LLC, and the completion of the project is highly likely.

In explaining the predicament, the City Crossing bankruptcy filing states that short-term loans were a reliable way to finance development projects prior to the onset of the mortgage crisis. In essence, short-term loans could be refinanced on a yearly basis, which permitted the developer to tap into the equity in the underlying real estate and obtain favorable interest rates, according to the filing. In the current environment, the developer needs to replace its short-term financing with longer-term loans that will permit it to complete the project without seeking further financing.

"Mr. Plise has the financial wherewithal to make a substantial contribution to the Debtors reorganization, which will be essential to a successful reorganization," states the filing. "The Debtor will use the breathing space afforded it by the Bankruptcy Code to negotiate with the lenders to obtain [longer term financing] on a go forward basis."