Americas most expensive neighborhood with $500M homes on verge of collapse: Ego got in the way

A Malibu hilltop enclave, once billed as the most expensive new neighborhood in America, is on the verge of collapse.Four of its five mansions are unsold, and the developer is locked in a bitter bankruptcy fight with his financial partner.

The project, known as the Case, is the work of developer Scott Gillen.Gillen paid $50 million in 2017 for a 24-acre ocean-view parcel — then a record for undeveloped land in Malibu, The Wall Street Journal reported.He planned five sleek homes inspired by California’s midcentury Case Study Houses, priced from about $40 million to $100 million each.Together, he hoped they would sell for close to half a billion dollars.Nearly a decade later, only one home has sold, for $61 million in 2024, according to property records cited by the Journal.

The other four are nearly complete but still on the market.Real estate agents who worked on the project said the developer was largely to blame.“Ego just got in the way,” Compass agent Tracy Tutor, who worked on sales at the Case in 2019, told the New York-based paper.

This summer, entities tied to Gillen filed for Chapter 11 bankruptcy protection.The filings list a long roster of creditors, from landscapers and a security firm to subcontractors.They also show outstanding loans from JPMorgan Chase and an entity tied to the bridge lender Private Mortgage Fund.The largest debt is owed to a company tied to Los Angeles developer and investor Barry Shy, Gillen’s partner.

Shy’s company says it provided a $260 million promissory note to the project in 2021.Shy claims Gillen now owes him more than $240 million with interest.

Gillen disputes that, saying in court documents that the outstanding principal is $89 million.Shy has accused Gillen of mismanaging the project and wants a court-appointed receiver to take control.Gillen, in turn, has accused Shy of fraud and self-dealing.

He says Shy cut off funding in 2025 to squeeze him out.Gillen also claims Shy threatened to block a $110 millio...