Deep Dive on Reno City Center: what really happened and Bristlecone/Chris Beavor's new proposal

by Mike Van Houten / Feb 11, 2025


Bristlecone's Proposed Bankruptcy Settlement of Reno City Center: What You Need to Know

Overview

Reno City Center, a major redevelopment project in downtown Reno, has hit financial trouble and is going through bankruptcy proceedings under Chapter 11. The project, which aimed to transform the former Harrah’s Hotel & Casino into a mixed-use development with apartments, office space, retail, and restaurants, has faced delays, cost overruns, and financial disputes among investors and developers.

The current bankruptcy case revolves around disputes between the original project manager, Bristlecone Management (BCM), and a group of investors called the Gryphon Members, as well as loan repayments to Delphi CRE Funding, a key lender. The legal battles over control and financial responsibility have led to an attempt to reorganize and settle debts. There are now two dual paths to settlement, and this outlines the second one, proposed by Bristlecone/Beavor. The first one can be found here. Keep in mind this was all derived from Birstlecone's/Chris Beavor's recently submitted disclosure statement to the courts, and does not represent any opinion of mine

Background of Reno City Center

  • Originally, the project was spearheaded by Christopher Beavor and CAI Development, who acquired the Harrah’s property in 2020 with a vision to redevelop it.
  • The project included converting 930 hotel rooms into 529 apartments, along with office and retail space.
  • The developers secured multiple rounds of financing, including loans from Parkview Financial and later Delphi CRE Funding, with the final loan amounting to $138 million.
  • In 2023, disputes arose over project direction and funding, leading to a power struggle between Bristlecone Management (BCM) and the Gryphon Members.
  • Key Issues Leading to Bankruptcy
  • Disputes Over Management Control: The Gryphon Members removed BCM from managing the project in 2023, leading to arbitration and legal challenges.
  • Financial Problems: The project faced unexpected costs due to construction issues, pandemic-related delays, and financing difficulties.
  • Loan Defaults: Reno City Center defaulted on its loan to Delphi, leading Delphi to seek foreclosure and push for a financial resolution.
  • Legal Challenges: Multiple lawsuits and arbitration cases have stalled progress, including accusations of financial mismanagement and investor conflicts.

A proposed new settlement and Bankruptcy Plan

I reported an original bankruptcy plan here and here, however Chris Beavor/Bristlecone Management has come forward with a Plan of Reorganization proposed by CAI Development.

The plan from Bristlecone/Beavor aims to:

  • Settle Debts with Delphi CRE Funding:
    • The original loan of $138 million was reduced through negotiations.
    • A $10 million payment was made in October 2024 by Reno City Center LLC (the debtor)
    • Another $37.5 million payment is due by February 28, 2025, to avoid foreclosure.
    • Delphi will receive an additional $7.5 million to settle other outstanding claims.
  • Resolve Mechanic’s Liens and Government Claims:
    • Contractors and suppliers with mechanic’s liens on the project will be paid off with interest.
    • Outstanding city and county taxes and fees will also be settled.
  • Pay Unsecured Creditors:
    • General creditors will receive 95% of their approved claims, meaning most vendors and contractors will get paid nearly in full.
  • Reorganize Management and Ownership:
    • A new entity, CAI Acquisition LLC, affiliated with Beavor, will take over the project.
    • The previous management structure involving the Gryphon Members and BCM will be dissolved.
    • CAI and Beavor have agreed to release their financial claims against the project in exchange for control.

What Happens Next?

  • The bankruptcy court must approve one of the two plans before it takes effect.
  • If the $37.5 million payment isn’t made by February 28, 2025, Delphi can foreclose on the property.
  • Contractors and suppliers should expect payments to be processed once the plan is confirmed.
  • The future of the Reno City Center project depends on whether CAI Development under this plan, can secure financing to complete the project under its new ownership. The original plan did seem to outline a path to completion.

Bottom Line

The bankruptcy settlement aims to prevent foreclosure, pay off creditors, and restructure ownership to get the Reno City Center project back on track. However, if the February deadline is missed, Delphi could seize the property, potentially forcing a sale or liquidation.
This case highlights the financial risks of large-scale redevelopment projects and the importance of stable funding and management in commercial real estate ventures.

Fraud Allegations in Reno City Center Bankruptcy: The Battle Between Beavor/Bristlecone and Gryphon

The Reno City Center bankruptcy case is not just about financial troubles - it is also marked by serious accusations of fraud, mismanagement, and power struggles between the key players: Christopher Beavor (through Bristlecone Management, BCM) and the Gryphon Members (investor group led by Kirk Walton and Philip Oleson).
At the heart of this dispute is whether Beavor and Bristlecone mismanaged project funds - or whether Gryphon unfairly pushed them out to take control of the project.Let's take a look at the arguments from both sides fairly. Again, this is all pulled from Bristlecone/Chris Beavor's submitted disclosure agreement. 

Gryphon’s Allegations Against Beavor & Bristlecone

The Accusations:

  1. Financial Mismanagement & Misuse of Funds: Gryphon claims that Beavor and BCM misused investor funds, causing unnecessary cost overruns and delays in the Reno City Center project. They allege that money meant for the redevelopment was not spent properly, leading to the project's financial collapse.
  2. Failure to Secure Additional Funding: According to Gryphon, Beavor repeatedly promised that he could secure additional capital for the project but failed to do so. Instead, he allegedly kept demanding more money from Gryphon while making inaccurate financial projections.
  3. Questionable Transactions & Conflicts of Interest: Gryphon alleges that Beavor used his control of Bristlecone to steer contracts or funds to related entities under his influence.They argue that these transactions benefited Beavor and his associates rather than the project.
  4. Fraudulent Reporting & Concealment of Issues: Gryphon contends that Beavor misrepresented the project’s true financial condition to investors and lenders.They claim he downplayed the rising costs and delays, making it seem like the project was on track when it wasn’t.
  5. Unapproved Lease & Management Agreements: After BCM was removed, Gryphon discovered that Beavor had entered into multiple agreements without proper approval, including: A management contract allowing Bristlecone to maintain control over operations and a lease agreement with an external entity (PKWY Tavern, LLC) without court approval.

Gryphon’s Legal Actions

  • Based on these allegations, Gryphon removed BCM as project manager in May 2023.
  • They informed Delphi CRE Funding (the main lender) that Beavor had mismanaged funds, triggering Delphi to demand immediate payment on Beavor’s personal guarantee.
  • Gryphon argues that these fraudulent actions put the entire project at risk and forced it into bankruptcy.

Beavor & Bristlecone’s Defense Against Fraud Allegations

Their Counterclaims:

  1. Gryphon Sabotaged the Project for Their Own Gain: Beavor argues that Gryphon’s accusations were a deliberate strategy to take over the project and remove him from control. He claims that Gryphon originally promised to provide more funding but later refused, forcing financial distress on the project.
    • Project Challenges Were Unavoidable & Transparent. Beavor maintains that the rising costs and delays were not due to fraud, but rather unexpected challenges:
      • Pandemic-related material and labor shortages
      • Structural problems discovered during redevelopment
      • Reno’s extreme weather events
        He insists that he kept investors informed about the difficulties as they arose.
  2. The Attempt to Convert Part of the Project into a Hotel Was a Key Conflict
    • One of the major disputes was Gryphon’s push to convert one of the towers into a new hotel, instead of apartments.
    • Beavor strongly opposed this plan because:
    • It would have violated a non-compete agreement he had with another Reno hotel development.
    • The project was originally approved based on residential conversion, and shifting to a hotel would have required major financing and regulatory changes.
  3. Fraud Allegations Were Manufactured to Trigger Foreclosure
    • Beavor argues that Gryphon exaggerated financial problems and mismanagement in their report to Delphi, knowing it would cause Delphi to demand immediate repayment.
    • He believes this was a calculated move to force him out and take full control.
  4. The Removal of Bristlecone Violated Legal Agreements
    • Beavor contends that Gryphon did not have the right to remove Bristlecone as manager without arbitration.
    • He claims their takeover was illegal, and that Gryphon ignored required legal steps for removing a project manager.

Beavor’s Legal Actions

  • He has challenged the removal of BCM in arbitration, arguing that it was wrongful and violated agreements.
  • He is also pursuing financial damages against Gryphon and its principals, Walton and Oleson, for defamation and wrongful interference.

Where Things Stand Now

  • The fraud accusations remain unresolved, as both sides are engaged in ongoing litigation and arbitration.
  • The bankruptcy court is currently focused on financial restructuring, but the underlying dispute over fraud and mismanagement could impact future legal claims.
  • The outcome of pending arbitration could determine whether Beavor regains a role in the project - or if Gryphon’s takeover is upheld.

Bottom Line

  • Gryphon says: Beavor mismanaged funds, misled investors, and engaged in fraudulent behavior that caused the bankruptcy.
  • Beavor says: Gryphon starved the project of funding and falsely accused him of fraud to take control and push their own hotel plan.

This is a high-stakes dispute with millions of dollars at stake, and the final resolution may depend on the arbitration ruling and court decisions in the coming months.

Who is Owed Money? 

Below is a list of creditors from the Reno City Center bankruptcy case, grouped by their priority level based on the disclosure statement:


🔴 ADMINISTRATIVE CLAIMS (Highest Priority)

These are costs related to managing the bankruptcy process and must be paid in full.

  • • U.S. Trustee’s Office (fees for managing the bankruptcy)
  • Fletcher & Lee, Ltd. ($350,000 estimated legal fees)
  • Harris Law Practice LLC ($200,000 estimated legal fees)
  • Porter Simon PC (Committee legal fees – unknown amount)
  • PKWY Lease Agreement (cure amount unknown)
  • Other unpaid post-petition accounts payable (amount unknown)

🟠 CLASS 1 – SECURED LENDER (Delphi CRE Funding)

Delphi holds a secured claim against the Reno City Center property.

  • Delphi CRE Funding, LLC
    • $47,500,000 (secured claim)
    • Additional $7,500,000 (unsecured claim in Class 5)
    • Additional $2,500,000 for Mezzanine Loan

🟡 CLASS 2 – SECURED GOVERNMENT STATUTORY CLAIMS

These are tax and municipal claims that must be paid in full with 4% interest.

  • City of Reno (Sewer Fees & Taxes) – Total: $252,210.96
  • Washoe County Treasurer (Property Taxes) – $683,941.97
  • Reno-Sparks Convention & Visitors Authority (Tourism Tax) – $42,473.97

🟢 CLASS 3 – SECURED MECHANIC'S LIENS (Contractors & Suppliers)
These are contractors, engineers, and suppliers who filed mechanic’s liens against the project.

🔵 CLASS 4 – GENERAL UNSECURED CREDITORS
These are vendors, service providers, and others without collateral.
(Under the proposaed settlement they will receive 95% of their claim amount.)

🟣 CLASS 5 – UNSECURED CLAIM OF DELPHI CRE FUNDING
• Delphi CRE Funding, LLC
o $7,500,000 (settlement payment required under bankruptcy plan)
o $58,904,600 (unsecured deficiency claim)

🟤 CLASS 6 – CLAIMS OF CAI & AFFILIATES (Beavor-Related Entities)
These are claims filed by Beavor and his companies.
Luxe Industries, LLC $18,919,689.94
CAI Reno Hotel OZ Fund, LLC $101,975.53
Bristlecone Management, LLC $199,018.34
CAI Development, LLC $33,820.12
CAI Investments, LLC $855,234.71
CAI Investments Healthcare DST $229,281.58
CAI Investments Sub Series 300 $100,000.00
CAI Reno Hotel Partners, LLC $133,704.30
CAI Tempe Hotel Partners $240,000.00
Christopher Beavor (Personal Claim) $138,371,187.00
PFM Harvard, LLC $77,500.00
Silver State Realty & Investments $723,098.80
• Beavor’s $138M claim is disputed and subject to arbitration.
• CAI & Beavor will release their claims if their bankruptcy plan is approved.

CLASS 7 – EQUITY HOLDERS (Lowest Priority)
This consists of Mezzanine Borrower LLC, which owns 100% of Reno City Center Owner, LLC.

💰 Summary of Payment Priorities
1. Admin Claims (bankruptcy expenses, legal fees) – Must be paid in full.
2. Class 1 (Delphi secured loan) – Must be paid by Feb 28, 2025, or Delphi forecloses.
3. Class 2 (Gov. taxes & fees) – Paid in full with 4% interest.
4. Class 3 (Mechanic’s liens) – Paid in full with 4% interest.
5. Class 4 (Unsecured creditors) – Paid 95% of claims.
6. Class 5 (Delphi unsecured deficiency claim) – Settled for $7.5M.
7. Class 6 (Beavor & CAI claims) – Released in exchange for control of the project.
8. Class 7 (Equity holders) – Receive nothing (they are last in line).
________________________________________
🚨 Key Takeaways

  • Delphi is the biggest creditor, holding both secured and unsecured claims.
  • Government agencies & contractors must be paid in full.
  • Beavor & CAI are giving up claims in exchange for project control.
  • If the $37.5M payment isn’t made by February 28, 2025, Delphi forecloses.

Serttlement of one of the two paths being explored is crucial to keep Reno City Center from being seized by Delphi.

The $75,000,000 settlement proposed by Bristlecone/Beavor mentioned in the document likely refers to the total estimated secured and unsecured claims that need to be resolved as part of the Reno City Center bankruptcy settlement and restructuring plan.

How CAI Development Plans to Fund the $75M Bankruptcy Settlement

CAI Development, led by Christopher Beavor, has proposed a Plan of Reorganization to settle Reno City Center’s debts and take control of the project. But with $75 million in obligations asnd proposed settlement offer, the big question is: Where is the money coming from?

1️⃣ Sale of Reno City Center Assets

  • CAI Acquisition LLC, an entity affiliated with Beavor, will buy the assets of Reno City Center from the bankruptcy estate.
  • The purchase will be “free and clear” of all previous debts, meaning creditors will be paid from the sale proceeds.
  • The sale price is not explicitly disclosed in the document, but it’s structured to cover key liabilities, including:
    • $47.5M to Delphi CRE Funding (secured debt)
    • $7.5M to Delphi’s unsecured deficiency claim
    • Other outstanding claims

2️⃣ Private Financing or New Loan

  • CAI is likely securing a new loan or investment partners to raise capital.
  • Possible financing sources include:
    • Real estate investment firms or private lenders
    • New equity investors looking for a stake in the project
    • Opportunity Zone funding (Reno City Center qualifies for federal tax incentives)
  • The document does not confirm a lender yet, but CAI must close financing before February 28, 2025, or Delphi will foreclose.

3️⃣ Investor Capital & Equity Infusion

  • Beavor’s network of investors may provide private equity funding.
  • The document hints at past investors in CAI-affiliated projects who could contribute fresh capital.
  • Beavor and CAI-affiliated entities are giving up their $138M in claims as part of the proposed settlement, meaning they may be reinvesting in exchange for future ownership.

4️⃣ Revenue from Reno City Center Operations

  • CAI plans to generate revenue from the property by:
    • Continuing to operate the Reno Suites hotel
    • Leasing out commercial and retail spaces
    • Potentially selling or refinancing portions of the property
  • If CAI can stabilize cash flow, it could help cover remaining claims and fund development.

🛑 Risks to CAI’s Funding Plan

  1. No Confirmed Lender Yet – If CAI cannot secure financing by February 28, Delphi forecloses.
  2. Market Conditions – Rising interest rates and investor uncertainty could make it harder to raise capital.
  3. Pending Legal Disputes – The arbitration over Bristlecone’s removal could impact ownership and deter investors.

📌 Bottom Line

CAI Development is banking on a mix of private financing, asset sales, and investor funding. They must secure enough cash by February 28, 2025, or Delphi will take over the project. If successful, Beavor’s team will regain control and complete the Reno City Center redevelopment.

📌 Rating the funding options:

Traditional Bank Loan ⭐⭐⭐ Stable, long-term financing
Bridge Loan ⭐⭐⭐⭐ Quick, short-term funding
Private Equity / Opportunity Zone Funds ⭐⭐⭐⭐ Large investors, tax benefits
Joint Venture (JV) Partner ⭐⭐⭐ Shared financial burden
Crowdfunding / Tokenized Investment ⭐⭐ Decentralized funding option
Partial Property Sale ⭐⭐⭐⭐ Fastest way to generate cash
Bankruptcy Buyout ⭐ (Last Resort) If no funding is secured

What Happens Next?

CAI (under this plan) or Reno City Center LLC (under the first proposed amended plan) must finalize financing by February 28, 2025 or risk losing the project. If traditional financing or equity investment isn’t secured, they may turn to bridge loans, property sales, or JV partnerships. If CAI fails, Reno City Center could be sold off or taken over by Delphi.

⏳ CAI’s and Reno City LLC's clock is ticking. If they don’t act fast, Delphi will take over the project.

Ultimately, and this IS my opinion, this power struggle has cost downtown dearly, regarding a project that should already be open by now. While it can be debated whether this project is/was truly downtown's catalyst project that would jumpstart redevelopment again, there is NO DOUBT that a shuttered, detereorating structure that comprises two square city blocks of east downtown, has harmed downtown. 

Even when or if the project emerges from bakruptcy, there is no clear plan outlined on how or when the project would actually be completed, which according to third party estimates mention in a prior bankruptcy hearing, could cost $110,000,000 to complete. 
 

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