After years of financial struggle, Homestead Northwest of Lynden has thrown in the towel, filing bankruptcy to distribute its remaining assets to creditors.
That could mean significant losses for hundreds of local residents who invested with the company. For a number of years, Homestead paid its investors attractive interest rates of eight to 10 percent. Then the economic downturn crushed revenue from sales of the homes and condos that Homestead developed.
In a Chapter 7 bankruptcy document filed Wednesday, Jan. 18, the company and its founder-president, James Wynstra, report assets of between $1 million and $10 million. But the document also states that there likely will be no funds available for distribution to unsecured creditors - those who do not hold pledges of real estate to secure the money they are owed.
Due to some kind of input error in the online federal court document system, the bottom line of the document, which lists the total amount of money owed by the company, was cut off and was not immediately visible Thursday, Jan. 19, as this story was being written. The information should be available some time Friday.
The rest of the initial filing contains no new details about Homestead's finances, although that could change as additional documents are filed with the U.S. Bankruptcy Court in Seattle.
A key question is whether any money will be available for those whose investments have been secured by deeds of trust on Homestead real estate holdings. In civil lawsuits filed earlier, and in a complaint filed by the Washington Department of Financial Institutions, evidence has indicated that Homestead issued multiple deeds of trust on the same properties.
Some of those properties were also mortgaged to banks, which get repaid first when those properties are sold.
In an April 2011 administrative action accusing Homestead and Wynstra of selling unregistered securities, the Department of Financial Institutions estimated that the company owed $65 million to about 350 investors. Since that time, the company has sold off many of its holdings, such as the Birch Bay Waterslides, which were sold in September.
Wynstra and his company played an important role in the development of Lynden and the Pacific Northwest over the years. He spearheaded a variety of development projects that turned the town of Lynden into a Dutch-themed village and a tourist destination. He sold his Lynden centerpiece, Homestead Farms and Golf Resort, in 2010.
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