Seven Canyons golf resort is now in bankruptcy.

Sedona Development Partners filed a petition with the U.S. Bankruptcy Court on Thursday, May 27, to restructure its finances and take advantage of bankruptcy protection from its creditors.

Headquartered in Scottsdale, Sedona Development Partners is the parent company of Seven Canyons, a 200-acre private residence golf resort community located two miles north of West Sedona off Dry Creek Road.

Taking place under Chapter 11 of the U.S. Bankruptcy Code, the restructuring faces approval by the court of a reorganization plan and certain contingencies.

According to the petition, Sedona Development Partners estimates assets between $10 million and $50 million and liabilities between $50 million and $100 million owed to as many as 50 creditors, but did not specifically list them.

“Seven Canyons is one of the premier golf communities in the world, and we have every intention of continuing to operate and develop this beautiful and unique property,” David Cavan, founder and president of Sedona Development Partners, stated in a press release.

“Due to a variety of circumstances, including a prior bankruptcy filing by our primary lender, Specialty Financial, we must pursue a reorganization to accomplish this goal,” Cavan stated. “We have made arrangements with our current investor groups to assist us with operational funding requirements without further borrowing. We are optimistic that the Chapter 11 process will allow us the opportunity to successfully restructure [Sedona Development Partners] without interruption of operations.”

Specialty Financial Corp. manages Specialty Trust, a real estate lender focused on urban development, which filed for Chapter 11 protection in Reno, Nev., on April 20.

Specialty Trust has $117 million in liabilities including $60 million in foreclosed properties and assets of $203 million, according to Northern Nevada Business Weekly magazine.

Specialty Trust’s bankruptcy reorganization tied up Specialty Financial Corp.’s lending abilities to Sedona Development Partners.

George Matthew, vice president of Cavan Management Services, a commercial real estate company, also filed the Club at Seven Canyons for bankruptcy, estimating assets between $100,000 and $500,000 and liabilities between $100,000 and $500,000 owed to between 100 and 199 creditors.

Seven Canyons is comprised of time-shares and whole ownership villas, 32 private home sites and 395 private golf club memberships.

Sedona Development Partners was founded in 2001 and is affiliated with Cavan Management Services.

According to Sedona Development Partners, the golf industry is troubled throughout the nation.

After 40 years of growth of private golf clubs in the United States, 92 private clubs closed in 2008 and 2009, according to figures from Executive Golfer magazine supplied by Sedona Development Partners.

Over the next seven years, Executive Golfer magazine estimates that 9 to 12 percent of private golf clubs will fail nationwide, reducing the number by nearly 400 clubs.

Executive Golfer magazine editors estimate that 90 percent of private golf communities that opened in the last five years are suffering significant financial difficulties.

According to the press release, Seven Canyons has been able to continue operations while many other private golf communities have failed, due in part to the beauty of the Sedona area and the commitment of Sedona Development Partners to keep the project operational.

Through Chapter 11 reorganization, Sedona Development Partners intends to demonstrate Seven Canyons can be operationally and financially solvent, paving the way for future development and completion of the project, according to the press release.

“We believe the majestic beauty of this development, combined with the commitment of our investors, members, employees and the Sedona community are the

differentiating factors that will allow Seven Canyons to survive and thrive, despite the state of the industry and the economy in general,” Cavan stated in the press release. “We intend to be here for the long haul.”

Seven Canyons’ future plans are dependent on the bankruptcy court’s decision of the reorganization plan, said Cheryl Walsh, president of WalshCOMM, Sedona Development Partners’ public relations firm. She said the company did not know yet when it would be in court.

The resort has no plans to lay off staff nor change management, Walsh said. The company has gone back to its investors to generate enough revenue to emerge from Chapter 11.

Seven Canyons is the second large Sedona area resort to file for bankruptcy in the last 14 months.

In January, ILX filed with the Securities & Exchange Commission a joint plan of reorganization with its largest creditor and if approved, would sell the majority of its assets to Diamond Resorts. ILX filed for Chapter 11 in March 2009.