Bankruptcy auctions tend to be pretty mundane affairs, but every once in a while, a bankruptcy court has to sell a wildly valuable piece of property in order to help a deeply indebted person discharge his or her debts.
A recent case in Newport, California highlights just how expensive these auctions can be. Recently, a bankruptcy court decided it had to auction off a massive estate that was once valued at $87 million, according to a report from Forbes magazine.
So, if anyone is in the market for an Italian-style villa, there is one to be had at a bargain price. Of course, the discounted cost will likely still be above $50 million.
Creditors Demand Bankruptcy Auction for Huge Estate
According to a report from Forbes, the bankruptcy saga of one California estate appears to be nearing an end:
- The owner. Sources say that the estate, which is modestly known as the Villa del Lago, was put on sale after its developer, real estate agent John McMonigle, filed for Chapter 7 bankruptcy after amassing more than $50 million in debts. This year, McMonigle sold the estate to a group of developers, who proceeded to invest an extra $10 million into improvements on the property.
- The estate. Remarkably, the Villa del Lago is the largest plot of private residential real estate in Orange County, which is one of the country’s wealthiest zip codes. The estate is spread across 12.5 acres of gated hillside land and includes a 17-car garage, which is difficult to even imagine, let alone construct. The estate also includes a man-made lake with waterfalls and a horse stable.
- Placed on the market. Not surprisingly, the extent of this construction project left a lot of creditors with holes in their wallets. In order to recoup their lost costs, creditors looking for millions of dollars in debt asked the bankruptcy court to put the estate up for auction. The court agreed, and the starting auction price is $37 million, which is $50 million less than the price at which the property was initially valued.
Nuts and Bolts of Bankruptcy Auction
Most bankruptcy filers don’t have to worry about an auction of their home, but this is a truly unique example of a filer who accrued a remarkable amount of debt.
In this case, according to sources, the court-mandated sale of the estate is being held by an online auction marketplace based in California.
Interestingly, while the trustee who runs the auction has a mandate to meet creditors’ expectations, the trustee still has the power to accept a sale regardless of the price. So, some bargain-hunters may wish to see how low their offers can go.