The master developer of the massive Lake Las Vegas project 17 miles off the Las Vegas strip in Henderson, Nev. on Thursday filed for Chapter 11 bankrupcty protection in the U.S. Bankruptcy Court for the District of Nevada.

The filing was made by Lake at Las Vegas Joint Venture LLC, along with four other related companies. The others included Lake Las Vegas Operating Co., Lake Las Vegas Properties LLC, Lake Las Vegas Realty and Lake Las Vegas Realty Company.

Lake Las Vegas is a 3,592-acre resort and residential development that currently has approval for 9,000 residential units; roughly 1,600 of those units have been completed. More than $2 billion has been invested in the project since its inception in 1987.

For the JV case alone, debts are listed between $500 million and $1 billion, and assets are listed between $100 million and $500 million

The top unsecured creditors in the JV include TOUSA of Hollywood, Fla., Woodside Homes of Las Vegas, local attorney John O'Reilly, Contri Construction Co., and Las Vegas Paving.

The residential real estate portion of Lake Las Vegas includes 29 neighborhoods planned in three phases. Phase I includes 538 developable acres and is roughly 50% built out. Phase II and III are and less than 8% and 5% built out, respectively.

Debtors own roughly 10% of the remaining developable land in Phase I, another 10% in Phase II, and 84% in Phase III.

According to court documents, "Many of the builders who have built at the project have a significant amount of unsold inventory. At present there are over 500 partially finished and finished lots owned by various builders, and over 130 finished homes ready for sale."

Other production builders in the development include Centex, Toll Brothers, Intrawest, and Pardee. Product offerings include custom homes, courtyard villas, waterfront and golf villas, resort condominiums, luxury executive homes, and courtyard town homes surrounding a privately-owned 320-acre lake.

"Poor liquidity, substantial debt service, [and] extremely challenging real estate market conditions" were listed as reasons for filing for bankruptcy protection. LLV Holdco LLC, a subsidiary of Las Vegas-based Atalon Group, assumed control of the project earlier this year after previous owners defaulted on $540 million in loans.

Court records show that the previous owners, Transcontinental Group, owned the projects from 1987 until January 2008. Transcontinental was led by Ron Boeddeker, as well as Sid and Lee Bass. In November 2004, the group arranged for a $560 million loan and took cash distributions of $470 million.

In May 2005, the loan was restructured to show total indebtedness of $570 million. In June 2007, the principal amount outstanding was restructured to reflect a loan in the amount of $540 million.

The "existing facility" series of loans was syndicated and eventually went into default on Sept. 30, 2007, because it was unable to meet terms established that required the borrowers to "sell part of the project and generate net sale proceeds that would reduce the existing facility by $90 million" within a given time period.

In an effort to continue operations despite the market's housing tailspin, the JV is seeking interim financing from a group of lenders led by Credit Suisse.

Learn more about markets featured in this article: Las Vegas, NV.