Troubled developer files for bankruptcy
John C. Kline, facing bank foreclosures and multimillion-dollar court decrees on development deals, has filed for bankruptcy protection.
Kline claimed business debts of between $1 million and $10 million and assets in that same range in the Chapter 7 filing, under which he would liquidate assets to pay debts and possibly have some debts excused.
Unlike many bankruptcy filings, Kline’s provides few details about his debts or assets or overall financial condition.
Creditors listed in the petition include 24 banks and credit unions, a construction bonding company and a land development company. The filing would halt debt-collection actions by those creditors, including banks that have filed lawsuits against Kline. A possible eception is a fraud ruling in a civil case.
On Jan. 19, a Dallas County judge ordered Kline and his company to pay nearly $2.2 million to First National Bank Midwest in connection with a soured mortgage related to the Heritage Hills development in West Des Moines. The judgment also included $145,646 in costs and $687 a day in interest from Sept. 28. The property is scheduled for sheriff’s sale March 24.
In a separate ruling in that case, Judge Gregory Hulse determined that Kline committed civil fraud by using loan proceeds for personal expenses, including fees to a private jet service, rather than development costs. Hulse ordered Kline to pay more than $4.5 million to Eco-Tech Construction LLC in actual and punitive damages for work it had completed at Heritage Hills. That ruling consisted of slightly more than $1 million in actual damages and nearly $3.5 in punitive damages.
Hulse also found that Kline transferred $752,000 from the loan to Oaks Development Co., in which Kline had a 50 percent ownership interest.
A financial statement filed in case indicated that Kline had a net worth of $17 million and assets of $27 million, Hulse said in his opinion.
First National Bank Midwest and Eco-Tech are included in the list of creditors.
On Feb. 9, Kline’s residence at 3536 129th St., Urbandale, burned to the ground in a fire that started while he was at home with his family. The 13,000-square-foot home was valued at $1.2 million. Last September, Kline was released from a federal tax lien of more than $719,910 against the property for unpaid taxes.