One of Sedona’s largest private employers  filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code today, March 2, ILX Resorts Chief Financial Officer Margaret Eardley announced.

The filing came after ILX, a publicly traded company, was unable to negotiate an extension for payments on a $5 million promissory note owed to Textron Financial Corporation, according to documents filed with the Securities Exchange Commission.

About $4.57 million in principal is still outstanding, ILX reported.

The loan was due to be paid off  Dec. 31, 2008, but ILX negotiated two extensions on the payment, the last of which expired Sunday, Feb. 28.

ILX and Textron “have been unable to reach a mutally acceptable longer term extension of the loan,” ILX reported.

The loan is secured by an assignment of a promissory note owed to ILX and a “Deed of Trust from an affiliated limited liability company securing approximately 14 acres of land in Sedona.”

The company and several of its subsidiaries filed under Chapter 11 in the U.S. Bankruptcy Court in Phoenix.

“”Dramatic challenges in the economy and recent unanticipated reductions in our credit facilities caused by disruption and instability in the capital markets have necessitated that we seek reorganization protection to preserve resources for an orderly restructuring of the Company,” Joe Martori, ILX Chairman and CEO, stated in a press release.

ILX  expects Chapter 11 protection will “enable the company to conduct its business operations as usual. To that end, the Company is seeking approval from the court in order to continue managing its operations in the ordinary course,” Eardley stated.

“I can’t comment any further,” she said.

Susan Johnson contributed to this report.