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Re: “Developer Losing Support for Initiative

In case Alamedans have forgotten, SunCal is a party to 30 developer bankruptcies, including Oak Knoll, all filed in Santa Ana.

Pat Keliher has been blowing hot air at the City of Alameda and the voters for two key reasons:

First, Keliher is not an officer of any of the SunCal or D.E. Shaw entities with sufficient authority to bind them to anything on any topic relating to Alameda Point. From looking at the SunCal bankruptcy files, there are only two people with the authority to sign anything for SunCal, its owner Bruce Elieff and its general counsel Bruce Cook. Keliher is not an officer of D.E. Shaw, and has no authority to bind them to anything. BTW, the head of D.E. Shaw's real estate group is George Rizk. You haven't seen Mr. Rizk (love the name) waltzing around Alameda promising anything have you? In the organizational scheme of things, Keliher is a nobody and the City should not be wasting time "negotiating" with him.

Second, Keliher is a liar or an idiot if he thinks "binding agreements" can be created. As SunCal and its owners well know, in a developer bankruptcy, under the bankruptcy code they can REJECT any contractual promise, oral or written, which they have made, rendering the City a mere unsecured creditor who can "pound sand" in terms of trying to collect any damages for breach of these side agreements. In the meantime, all of the land use entitlements will have been permanent obtained by SunCal and no bankruptcy court judge can take them away. A perfect example of how that works was in the Chapter 11 bankruptcy of Lennar's subsidiary LandSource, where a detailed settlement contract concerning limitations on use of ground water in Newhall, California was "rejected by the debtor" and surprise, surprise, the new owner, also managed by Lennar claims that the new owner is not bound by that contract.

Keliher is full of something brown and sticky, and anyone who believes anything he, or anyone else from SunCal or D.E. Shaw has to say is simply grotesquely naive.

Posted by Vania on 12/03/2009 at 5:46 PM

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