Sale of troubled Diablo Grande goes to the wire

Published on Monday 6 October 2008 21:44

THE sale of US country club and housing development Diablo Grande was hanging in the balance last night after it emerged a court had still not given it the go-ahead – four days after the final closing date.

The development, which sought Chapter 11 bankruptcy protection earlier this year, owes $21 million to Bank of Scotland – which was the main financial backer of the scheme. But under the terms of the sale to Mexican company World International, just $16m will be returned to the Edinburgh-based bank.

A closing date of last Thursday was set last month by the bankruptcy court in Modesto, California.

Built about five years ago by pharmaceuticals entrepreneur Don Panoz, the founder of the luxury St Andrews Bay Hotel in Fife, Diablo Grande was a victim of the US housing downturn, with its upmarket $2m homes losing value in the property crash.

Diablo Grande, which is set to be sold for $20m, was originally put up for sale for more than $150m a year ago.

A court hearing was called last Wednesday to finalise the sale, but legal wrangles and clarifications over water supplies on the site meant the case was still going on yesterday.

Reports in American claimed that the sale was expected to close late last night, although experts warned that nothing was definite until the sale was finalised.