Developer David Walters' move into personal bankruptcy last week has already set off a dispute with a bank over ownership of his Pleasant Hill residence, court records show.
Walters filed last week for liquidation of his debts under Chapter 7 of the federal bankruptcy code, listing his liabilities at up to $50 million and his assets at less than $500,000.
Walters joins a group of about half dozen Des Moines-area commercial and residential developers to file for bankruptcy since the meltdown of real estate values in 2009. The group includes Joel Goodman, Randal Walters, John Kline, executives for Regency Homes and, most recently, Jon Garnaas, owner for Ladco Development Inc.
Walters, 63, didn't file detailed schedules of his debts, but listed nearly 50 creditors, mostly lending institutions. But court documents filed this week by Walters' lawyer, Jerrold Wanek, indicate that he intends to claim his home in Pleasant Hill as his homestead, making it exempt from bankruptcy proceedings.
But that filing prompted a quick response from attorneys for Bank of the West, who claimed in court documents that Walters' filing for bankruptcy was timed to keep the bank from obtaining an order this week in a separate lawsuit that likely would foreclose on the property for the bank.
"Debtors' filing of this case was with the intent to disrupt that action," a motion filed by Jonathan Kramer, Bank of the West's lawyer, said while asking that the separate court action be allowed to proceed.
Under federal bankruptcy rules, all debt litigation is delayed until the bankruptcy proceeding is completed.
Bank of the West and Walters have been engaged in a legal dispute since 2007 after Walters' companies defaulted on several loans. Recently, the bank's lawyers even attempted to obtain financial records of contributions or other property given by Walters and his wife, Jody, to their church, Cornerstone Family Church.
Kramer claimed in a response filed Tuesday that the Walterses had abandoned the family's $600,000 home and moved to West Des Moines. Kramer also cited an earlier court ruling in which Jody Walters had been turned down by a bankruptcy judge in an attempt to exempt her interest in the home by filing for personal bankruptcy.
But Wanek said the couple has neither abandoned its home nor lost Jody Walters' attempt to keep her interest in the home. He said that decision on Jody Walters' claim is on appeal before the 8th U.S. Circuit Court of Appeals.
"Due to continued harassment by Bank of the West, David Walters has temporarily exited the property solely for the purpose of protecting his children from harassment by process servers," Wanek said in a court document.
He added that the family intends to return to the home "since the petition in bankruptcy is now filed and presumably since the process servers will stop harassing the Walters family."
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