SilverRock Development Company, LLC and its affiliated debtors are seeking bankruptcy court approval to conduct an in-person auction for the sale of their 134-acre resort development property in La Quinta, California, moving away from a previously approved sealed bid process. The auction, scheduled for August 4, would start with a $60 million stalking horse bid and require minimum increments of $1 million, according to a motion filed Thursday in the U.S. Bankruptcy Court for the District of Delaware.
The debtors, who filed for Chapter 11 protection in August 2024, are developing a 525-acre master planned community known as "Talus" in La Quinta. After conducting what they describe as a "robust" marketing process reaching over 7,000 potential buyers, the debtors selected TBE RE Acquisition Co II LLC as the stalking horse bidder with a $60 million offer.
"The Debtors believe in light of the number of Qualified Bidders and on the basis of discussions and negotiations that the Debtors, their advisors, and the City, and its advisors, have had with such Qualified Bidders and their representatives that a competitive, live, multi-round Auction offers the best opportunity to ensure that the highest or otherwise best offer is achieved for the Assets," the filing states.
The motion details that the debtors' marketing efforts, conducted with real estate advisor Jones Lang LaSalle Americas, Inc. (JLL), included outreach to 7,294 potential buyers. More than 60 parties executed non-disclosure agreements to access the virtual data room, with five potential bidders submitting letters of intent to serve as the stalking horse bidder.
In addition to the stalking horse bidder, three other parties have been qualified to participate in the auction. To be eligible, qualified bidders must negotiate and finalize development documents with the City of La Quinta and submit a letter of intent by July 29, 2025, along with providing a $5 million bid deposit.
The auction process features several notable elements. The first round of bidding must start at $63 million, representing the $60 million stalking horse bid plus a $2 million break-up fee and the $1 million minimum overbid amount. Bidding will continue in rounds until no further bids are received. Bidders who fail to submit improved bids in a round will be disqualified from further bidding.
What makes this sale process unusual is the role of the City of La Quinta in approving any transaction. Following the auction, the highest bids will be presented to the La Quinta City Council, which will meet on August 5 to review the bids. The city must ultimately approve any transaction in accordance with California law.
"Although the Auction is for the Debtors' Assets, the Debtors and the City believe that in conjunction with the Auction, the City, the Qualified Bidders, the Stalking Horse Bidder, the Consultation Parties and the Debtors may engage in further discussions regarding the City's assets and development terms," the motion states.
If the winning bidder fails to close the transaction by November 12, 2025, the next-highest bidder will be obligated to close the deal.
The debtors are represented by Wilson Sonsini Goodrich & Rosati, P.C., the Law Offices of Benjamin M. Carson, P.C., and Victor A. Vilaplana. The case is pending before Judge Mary F. Walrath, with a hearing on the auction procedures motion scheduled for July 18, 2025.
The bankruptcy case is In re SilverRock Development Company, LLC, et al., Case No. 24-11647 (MFW), in the U.S. Bankruptcy Court for the District of Delaware.
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