Ritz-Carlton developer files for bankruptcy protection to retain control of resort development Article originally posted on AZ Central on November 5, 2025 Five Star Development, the developer of the Ritz-Carlton Paradise Valley, filed Nov. 4 for Chapter 11 bankruptcy protection, which is intended to create “a clear, court-supervised path” to finishing the resort, company leaders said. The filing creates an automatic stay, which halts most lender collection activity, including foreclosure proceedings. The project’s main lender, Madison Realty Capital, has filed for foreclosure on the project, and the development was scheduled to go to a foreclosure auction in November. The development is located at Lincoln Drive and Scottsdale Road. “This process provides the structure and transparency needed to bring the resort to completion and preserve the integrity of one of the most important developments in Arizona,” Gerald C. Ayoub, founder and principal of Five Star Development, said in a statement. “Our commitment to the Ritz-Carlton brand, our buyers and our community remains unwavering.” Chapter 11 bankruptcy is a form of bankruptcy that allows the existing debtor to continue running the business and managing assets. Chapter 11 bankruptcies allow businesses to be reorganized, including creating a plan regarding how to pay debts, instead of liquidating. Five Star is represented by O’Melveny & Myers LLP as legal counsel and Pivot Management Group as chief restructuring officer and restructuring adviser. According to Five Star, hotel construction at the $2 billion development is in its final phase, with interior finishes ready to begin once court approvals are finalized. Once the entire development is complete, it is planned to include the 215-room resort, 80 villas, 32 estate homes and a 29-acre shopping and dining district called the Palmeraie. “This filing is about preserving the extraordinary progress already made and securing the project’s successful completion,” Lance Miller, chief restructuring officer of Five Star Development and managing partner of Pivot Management Group, said in a statement. “Our priority is to position the company for a strong construction restart and deliver the world-class destination that the community has long anticipated.” Five Star Development received a $585 million loan from Madison Realty Capital in May 2023 to be used to finish construction of the resort and residences on the site. Since then, some of the villas, which are for-sale, condo-style residences, have been completed and been sold, but progress on the resort has “ground to a halt,” representatives from Five Star Development said in a court filing. According to a lawsuit filed by Five Star, Madison diverted resources to the villas instead of the hotel. “As a result, the project — once nearing completion — has ground to a halt,” court documents state. “The hotel sits unfinished. Costs have ballooned. Buyers of the Villas have backed out and even more are threatening to do so.” However, Paradise Valley was more interested in the tax revenue to be generated by the hotel than in the construction of the villas, and the allowance of the villas had been a concession by the town to get the resort. The town required “substantial progress” on the hotel as a condition of issuing certificates of occupancy for the villas, according to the lawsuit. Since the hotel’s progress halted, the town stopped issuing certificates of occupancy for the villas. The unissued permits halted the sale of 40 villas, according to the lawsuit, which would have generated $150 million in revenue.