Wall Street Journal: Real Estate Stings a Backer [SunCal], September 28, 2010


The real-estate bust has taken down hundreds of banks and property companies. In most cases, the executives of those companies haven't had to take personal financial hits. But Bruce Elieff could become a high-profile exception.

Mr. Elieff is chief executive of SunCal Cos., a large, closely held California land developer and home builder. The company ran into trouble in 2008 when its biggest lender, Lehman Brothers Holdings Inc., filed for bankruptcy, forcing SunCal to suspend work on 20 large residential property developments.

Now, if SunCal can't complete the projects soon or sell them to a new developer who can, Mr. Elieff could be personally on the hook for as much as $230 million. Lehman has said it intends to hold him to his guarantees.


Earlier this summer, a California state judge signed an order of attachment on Mr. Elieff's personal property, including three houses in Orange County, one of them in a luxury golfing community in Newport Beach. The order stemmed from a dispute over a $9.2 million distressed loan from Central Pacific Bank, guaranteed by Mr. Elieff, with which SunCal had planned to help fund a housing development in Alameda, Calif.

Central Pacific couldn't be immediately reached for comment, but the Alameda debt was sold as part of a portfolio of distressed loans in July 2008 to an investment group led by San Diego investor Keith Ayres. Mr. Ayres said in an interview that personal guarantees are "extremely typical" for land loans in California, and said he and his investors intend to pursue Mr. Elieff's assets if the note isn't paid in full.