Aaron B. Honigman had big dreams for his five acres in Mountain Village. One day, that empty land would become Rosewood — a $200 million redoubt of luxury, with 75 hotel rooms, 67 condos and five-star amenities.

But those dreams have hit hard times. Rosewood’s sales office is dark and locked, newspapers piled on the floor. The project is stalled and more than $50 million in debt.
And on Tuesday, Honigman filed for bankruptcy, one day before his land was to be sold in a foreclosure sale.

Honigman himself did not file for personal bankruptcy, the way you would if medical bills were piling up and you were unemployed and broke. Rather, three development companies owned by Honigman — Lot 129 LLC, West Galena Holdings and West Galena Real Estate — filed for bankruptcy.

It’s the latest play in a high-stakes boxing match between Honigman and his major lenders, a real-estate investment trust called NAREP II.

NAREP says that Honigman’s development defaulted on a $50 million loan following cost overruns and other missteps. Honigman, in turn, says that NAREP essentially set him up for failure, and he insists that Rosewood is within reach of breaking ground.

“Galena Holdings and Galena Real Estate have obtained all approvals necessary to begin construction once it can secure adequate construction financing,” Honigman’s lawyers write in legal papers, which were filed in eastern Michigan bankruptcy court.

Filing for federal Chapter 11 protection is a last resort for cash-strapped and debt-ridden businesses, but it does buy Honigman some time. It averts an immediate foreclosure sale and could allow him to present a reorganization plan to a federal bankruptcy judge and restart the Rosewood development.

In bankruptcy papers, the developer blames his creditors for his financial woes. In April 2007, NAREP lent Honigman $50 million, to be paid back that October. The money was to go to developing Rosewood and completing a luxury townhouse project, Courcheval, which was already underway.

But Honigman says that NAREP refused to hand out enough money for him to actually move forward on either project, or pay contractors and employees, putting his projects behind schedule and hurting him economically.

For example, Honigman says, NAREP refused to pay out enough money to make a computer-aided drawing of the proposed Rosewood development. Without those images, Honigman’s team had trouble pre-selling the development, and without that pre-sale cash, they couldn’t fund construction.

Honigman’s development companies would ask NAREP for payouts on their $50 million loan, but only get portions of what they’d requested. They couldn’t pay contractors, had to take out additional loans from family members and fell farther behind on other projects.

At the time, Courcheval was being built, and Honigman had agreed to begin repaying NAREP as soon as these homes were finished and sold. But Courcheval wasn’t finished on time, and all six of its $5 million to $6.2 million units are sitting unsold, according to online property listings.

With the loan coming due last year, Honigman asked for an extension and NAREP refused, Honigman’s lawyers say in the bankruptcy filing. Instead, the two sides renegotiated the deal. Honigman got an extension through mid-January, but agreed to pay higher interest rates.

On Jan. 22, NAREP declared that Honigman’s companies had defaulted on the loan (Honigman contests that point) and started foreclosure proceedings.

Representatives with NAREP were actually flying to Telluride for the foreclosure sale when Honigman’s lawyers filed for bankruptcy protection Tuesday afternoon. Darrell Daley, an attorney for the lenders, said they haven’t decided how to respond to the bankruptcy filing.

“We’re going to do everything we can to protect our interests,” he said.

Honigman did not respond to an e-mail seeking comment yesterday, and his lawyers did not return phone cal