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Here’s why:

The development is owned by Irvine based developer SunCal, although it is being developed in Castaic through a legally defined financial partnership with Lehman Brothers.

When Lehman Brothers filed for bankruptcy a few months ago, the funding for the partnered developments came to a screeching halt. This left areas like Northlake without the money necessary to continue or complete development work.

According to SunCal Spokesperson Joe Aguirre, the only way to get a new financial partner for the projects is to file Chapter 11.

“The filing will permit another lender to come in, use new capital to address the outstanding issues and allow development work to resume,” he said. “So we’re looking at this as a positive action.”

Since Lehman was the sole source of funding for the development, Aguirre said that their hand was forced. 

“Despite our ongoing efforts, Lehman has provided no meaningful response to our repeated requests for funding, and they appear to be either unwilling or unable to fulfill their obligation.”

The bankruptcy filing will also allow access to SunCal reserve funding of about $75 million that could help Northlake start paying bills again very soon. 

Northlake is not the only SunCal development that partnered with Lehman Brothers; several other developments throughout California have filed for bankruptcy seeking the same kind of opportunity to reorganize.

It is also important to note that SunCal itself is not declaring bankruptcy. Each of their developments is classified as a separate legal entity with specific funding partnerships.

So while the word “bankruptcy” may leave a bad taste in the mouth, in this instance it just may be music to the ears.