SunCal responds to questions about unpaid debts

In the past 4 1/2 months, eight lawsuits have been filed in Orange County accusing SunCal of failing to pay its debts or complete promised work on projects. Four properties planned for future developments either were foreclosed on or soon will be.

David Soyka, SunCal senior vice president of public affairs, recently provided the following written answers to Register questions about the company and its recent problems.

Q: What is happening with the cash flow at SunCal?

A: SunCal Companies is made up of many companies. It's discreetly financed, which is common for a real estate development firm. It's how non-public companies are financed. No two are identical.

The real estate business is cyclical. We've experienced downturns like this before.

Like every other homebuilding and land development company, we are facing market challenges. The entire industry is affected, and we're working with our lenders and Wall Street financial partners, both public and privately held companies, to decide how to adjust our business plans.

Q: At least four contractors and one supplier have filed lawsuits against SunCal alleging the company has failed to make payments totaling $1,271,672. In addition, another lawsuit mentions that there are $2.4 million worth of liens on the Marblehead Coastal project, and there are $2.2 million worth of liens on the company's McAllister Ranch project in Bakersfield. What is the situation with these claims?

A: Like many public builders, we are in the process of asking our subcontractors to work with us and help absorb some of the effect of the nationwide building industry downturn.

Some of these subcontractors are cooperating, and some have, regrettably, filed suit.

Q: You also have run into problems with your McAllister Ranch project, a 2,070-acre, 6,200-home development in Bakersfield featuring parks, a lake, a private beach club recreation center, and a golf course designed by Greg Norman. What's happening there?

A: McAllister Ranch is a unique master-planned community within the greater Bakersfield area. Our long-range planning continues, and we remain committed to completing this development as planned and approved. We previously had a very aggressive, accelerated construction schedule, but with the cyclical conditions of the housing market, it has become necessary to adjust our timelines.

Q: Finally, there is a lawsuit filed by Todd Kurtin, a former SunCal partner, alleging that SunCal CEO Bruce Elieff and numerous SunCal affiliates failed to pay $22.6 million of a $49 million court settlement agreement stemming from an earlier dispute. Did SunCal fail to make all the settlement payments, and if so, why?

Todd Kurtin is a former partner in several of the developments which were started prior to 1998. This is a partnership-related dispute that had been settled 2 1/2 years ago. This new suit is totally without merit. We had previously settled this matter, meeting all of our obligations, and now Mr. Kurtin is attempting to obtain consideration he is not entitled to. We complied with all our obligations as required by the court and the mediator.

Source: The Orange County Register