Daily Top 5
Bankruptcy plan could send incomplete Ritz-Carlton hotel to auction
Article originally posted on Phoenix Business Journal on September 29, 2026
A $2 billion, 122-acre luxury master-planned community in Paradise Valley is nearing an inflection point nearly a year after project developers filed for Chapter 11 bankruptcy protection in November 2025.
An entity connected to Scottsdale-based Five Star Development — the developer behind the long-delayed Ritz-Carlton, Paradise Valley, Palmeraie that is under construction near Lincoln Drive and Scottsdale Road — has submitted a reorganization plan in bankruptcy court that could lead to an auction sale of the property’s incomplete Ritz-Carlton hotel, as well as prime undeveloped land on the sprawling property.
Five Star Development’s Paradise Valley project has been in various stages of development since 2008, but it has been beset by delays and litigation in recent years. The project includes the 215-room Ritz-Carlton Paradise Valley Resort, 80 condominiums and 32 single-family homes as well as The Palmeraie luxury retail center.
Filed on Sept. 18 in the United States Bankruptcy Court for the Southern District of Texas, the joint Chapter 11 plan for the debtors of the Ritz-Carlton development would go to a vote on Nov. 4 if it is approved by a judge.
The proposal calls for Five Star Development’s assets to be transferred to a plan trust, which will “hold, administer, liquidate and distribute the plan trust assets for the benefit of the plan trust beneficiaries,” according to the document.
The property’s 215-room, ultra-luxury Ritz-Carlton hotel and resort would be marketed for sale under the plan. The property includes restaurants, retail, meeting and ballroom space, according to the plan document.
The hotel sale would be required to go through court-approved bidding procedures, and any sale would be subject to bankruptcy court approval. Those procedures would require that any qualified bidder must “identify an experienced hotel developer who is committing to complete development of the hotel Property and who is reasonably acceptable to the Ritz Project Debtors,” according to the proposed plan.
Debtors maintain optionality
Under the proposal, the project’s debtors would maintain an equity purchase option that would allow the holders of the debtors’ parent equity interests to purchase the hotel property and undeveloped real estate “free and clear of liens, claims, interests, and other encumbrances.”
The price for that option would be $570 million, minus the $90 million previously agreed to for the project’s lender, Madison Realty Capital, to purchase other Five Star-owned properties in El Paso, Texas, through a credit bid. That sale was approved Sept. 25, according to bankruptcy documents.
The final price for the equity purchase option would also take into account Madison’s claims; full payment to Five Star’s unsecured creditors; and any villa proceeds already paid to Madison. Madison Realty Capital provided Five Star with a $585 million loan related to the Ritz-Carlton development in May 2023, according to Maricopa County records. It moved to foreclose on the property in August 2025.
Both Five Star Development and Madison Realty Capital declined to comment for this story. However, the Chapter 11 plan offers details about what may come next at the Paradise Valley site — including with the unsold villas and undeveloped real estate.
Find Complete Article HERE