Five Star Development filed for Chapter 11 on November 4, 2025. Since then, 20 villas at The Ritz-Carlton Residences, Paradise Valley have closed, according to a debtor filing dated September 22, 2026. The filing prints the net villa sales proceeds as "approximately $65,372,425 million," which reads as a typo for roughly $65.4 million. The 215-room hotel those villas were designed around has no opening date. The 29-acre retail district next door has no confirmed tenants. And under the plan now before the court, none of the villa sale money is earmarked to finish either one.
So a villa buyer here is getting solid title and taking a long, open-ended bet on timing. Neither of those shows up in a closing price.
Where the villa money goes
The case is In re F-Star Socorro, L.P., No. 25-90607, in the U.S. Bankruptcy Court for the Southern District of Texas. The public docket is on the Stretto case site. The joint plan filed September 18, 2026 is a liquidating plan. It does not keep the developer running the project. The remaining project assets would go into a Plan Trust, with Chief Restructuring Officer Lance Miller as the first trustee.
The plan is specific about villa proceeds. After brokerage commissions, customary closing costs, and royalty fees, the money goes only to the construction lender, Madison, to pay down its debtor-in-possession and construction-loan claims. No trust beneficiary receives any distribution from villa sales. Madison's construction-loan claim is $570,310,000 under the plan, subject to the defenses and adjustments the plan preserves. Madison's separate $8.5 million debtor-in-possession advance, which carried 16% annual interest, has already been repaid in full from villa proceeds.
The project's old ownership group can buy the hotel back. The bidding procedures must give parent-equity holders an option to buy the hotel, its furnishings and equipment, and the undeveloped land for at least $570 million in cash. That figure goes up by Madison's allowed DIP and bonding claims and by enough to pay allowed general unsecured claims in full. It goes down by a $90 million credit from an El Paso property sale and by any villa proceeds paid to Madison before the option deadline. In other words, villa proceeds that reach Madison before that deadline lower the price at which the original owners could take the hotel back.
Twenty closings worth roughly $65.4 million averages out to about $3.3 million per villa, and that is after commissions and fees. Before the filing, in August 2025, the Phoenix Business Journal reported a single villa sale at $6.48 million. One sale and one average don't make a trend. Together they show buyers paying multimillion-dollar prices for residences tied to a resort that has not opened.
What the court order covers, and what it leaves open
In December 2025 the court entered a Final Villa Sales Order, and Five Star announced it on PR Newswire. According to the release, liens, including mechanics' liens, attach to the net sale proceeds and not to the villas. Buyers get federal good-faith purchaser status, so a completed sale cannot be undone even if someone appeals. Title insurers are authorized to issue clean, insurable title.
The order covers ownership of the villa. The hotel, the restaurants, and the retail district the villa was marketed alongside are outside its scope.
| Element of the purchase | Status in the filings, as of October 12, 2026 |
|---|---|
| Title to the villa | Covered by the Final Villa Sales Order; liens attach to proceeds |
| Ritz-Carlton branding | Ritz-Carlton's 2007 residential license and operating agreements would be assumed under the plan |
| Hotel, spa, 400-foot pool, Mott 32, Carbone | Described as hotel features; depend on a future buyer finishing construction |
| The Palmeraie retail district | Planned; leases or letters of intent reported, no operating tenant list found |
| Owner amenity access while the hotel is closed | Not established in any filing reviewed |
The brand is the most secure part. Ritz-Carlton's residential license and its development, pre-opening, and operating agreements would be assumed. Ritz-Carlton would waive its cure payments and receive nothing under the plan. The Ritz-Carlton name stays.
The amenities are less certain. The developer's bankruptcy declaration describes a 215-room resort with a 16,000-square-foot spa, more than 80,000 square feet of outdoor event space, a 400-foot pool, and restaurants including Mott 32 and Carbone. The resort would be operated by The Ritz-Carlton Hotel Company, a Marriott subsidiary, "once operational." It says every home has "direct access to the Hotel and retail district." The residences' own materials list base concierge services such as travel arrangements, restaurant and spa reservations, golf tee times, and mail delivery. Butler, housekeeping, and grocery shopping are listed as à la carte or coordinated services. In December 2025, Five Star said owners "continue to enjoy full Ritz-Carlton-managed services and one-of-a-kind amenities." That is the company's own statement. No filing we reviewed spells out which hotel amenities owners can use while the hotel is closed, how the owners' association is set up, or what dues fund.
The clock on the hotel
Construction on the hotel and residences began in 2018. By 2023 the project was nearly complete, and by early 2025 it had largely stalled. In March 2025 the developer told The Arizona Republic that the hotel "could open in late fall of 2025 or early spring 2026." Both dates have passed. The current plan gives no opening date at all, only a sale process:
- October 19, 2026. Deadline for preliminary challenges to Madison's voting and credit-bid rights, under a scheduling order signed October 8.
- December 15, 2026. A hearing on those disputes, followed by final approval of the disclosure statement and plan confirmation. This replaces the November 18 date in an earlier filing.
- After confirmation. The debtors market the hotel under court-approved bidding procedures. If the equity option isn't exercised, the hotel goes to auction. Every qualified bidder must name an experienced hotel developer committed to finishing the property and show where the completion money will come from.
- Up to six months after the bidding procedures are approved. The deadline for the hotel sale to close. The debtors can extend it twice, by six months each time.
Suppose the bidding procedures were approved soon after a December confirmation. The base deadline would then fall around mid-2027, and two extensions would push the outer limit to around mid-2028. That is only the deadline for the sale to close. Finishing construction and opening the hotel would come after that, on a schedule the winning bidder would set. The buyer must also take on all statutory lien claims, meaning the mechanics' and materialmen's liens, as a condition of closing.
Madison could end up owning the hotel. The plan lets the debtors ask the court to deny or limit Madison's right to credit bid. If Madison wins anyway, it takes the property subject to a clawback whose amount the plan does not set. A September 28 order authorized a $180 million replacement debtor-in-possession commitment in the case, separate from whatever completion funding a hotel bidder has to show.
The Palmeraie has no clock at all
The plan sets no deadline for selling the retail land. The developer's declaration describes The Palmeraie as a fully entitled 29-acre district planned for about 160,000 square feet of luxury retail, dining, and experiences, built as a walkable open-air extension of the hotel. It says several global luxury brands had signed leases or letters of intent. Our research found no list of tenants actually operating there.
Under the plan, any undeveloped land can be sold along with the hotel, either as part of the hotel package or as separate lots. Any land still unsold when the plan takes effect can be marketed by the trustee "in his sole and absolute discretion," without further court approval. The trustee may choose a private sale over an auction. The general rule is that the trust holds its assets until its litigation against Madison is resolved, unless the trustee decides an earlier sale preserves value. Meanwhile, property taxes and insurance on the land come out of the trust's funding.
So the retail district promised as part of the setting could be sold whole, in parcels, or not for some time, and possibly to an owner with different plans.
What happens to the villas that haven't sold
The declaration counts 80 villas, all pre-sold at one point, with 44 sold by the time of the filing. It also lists 32 estate homes, though the declaration's overview says 30. In December 2025, Five Star said it had released "a limited number of select Villas" after the initial sellout.
Under the plan, the debtors or the trustee will make commercially reasonable efforts to sell the remaining villas. They also have sole discretion to transfer or abandon villas to Madison instead, in exchange for a court-set reduction of its loan claim. That means the next owner of a nearby villa might be the lender rather than a household. It could also mean unsold inventory changes hands in a single transaction instead of moving one sale at a time.
Questions buyers are raising
Can a villa buyer close right now? Yes. Villa closings have continued under the court-approved framework, with 20 closed between the petition date and September 22, 2026.
Is the plan confirmed? No. The disclosure statement and plan confirmation are scheduled for December 15, 2026. The sources we reviewed show no ballot results and no confirmation order.
Will the hotel still be a Ritz-Carlton? Under the plan, Ritz-Carlton's 2007 residential license and its development and operating agreements would be assumed. Who completes the hotel, and when, depends on the sale.
Where can the filings be read directly? The claims agent posts the docket, the plan, and the sale documents on the F-Star Socorro case site.
This post explains how the bankruptcy plan and the villa sales order work, based on public filings and reporting. It is general information, not legal, tax, or financial advice. Anyone considering a purchase should confirm the title, association, and amenity terms with their own attorney and title professional.
Hague Luxury Network helps buyers and sellers in Paradise Valley evaluate resort-branded residences against the court timeline and against the estates nearby, and we handle those conversations privately. Request a Confidential Consultation.
