Original Developer Repurchases “The Ruins” in $11.2 Million Bankruptcy Court Sale

Northeast Radio SD News – Watertown, SD - On June 4, 2026, the United States Bankruptcy Court for the District of North Dakota officially approved the $11.265 million sale of the Watertown, South Dakota real estate known as “The Ruins”. Judge Shon Hastings granted Chapter 7 Trustee Erik Ahlgren’s motion, authorizing the property to be sold free and clear of a massive web of prior liens, mortgages, and legal claims.

The Buyer: A Familiar Face Returns

The property, located at 315 E Kemp Avenue, was sold to Build, LLC for $11,265,000.00. Build, LLC is owned by Jesse Craig, the original developer of the apartment complex, who lost ownership of the property during the grueling bankruptcy process.

Court documents reveal that Craig was highly active during the bankruptcy proceedings. When the Trustee filed a motion to approve bidding procedures on March 2, 2026, Craig formally objected on March 16, contesting the proposed timeline and certain terms of the purchase agreement. By March 31, Craig and the Trustee entered into a stipulation that resolved his concerns, clearing the way for the auction.

To secure the massive transaction, Build, LLC deposited $1,126,500.00 in earnest money (ten percent of the sale price). The court also approved Archer Land Co., LLC as the official backup buyer in the event Build, LLC defaults or fails to close. The backup bid from Archer was for $6,100,000.00—highlighting that Craig outbid the next highest competitor by over $5.1 million to reclaim his project.

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The Financial Collapse: A Timeline of Bankruptcy

The sale marks the end of an 18-month legal process for the property:

·        January 6, 2025: The Ruins, LLC officially filed for Chapter 11 bankruptcy relief.

·        December 31, 2025: Following a motion by primary creditor Red River State Bank, the court ordered the conversion of the case from a Chapter 11 reorganization to a Chapter 7 liquidation.

·        January 6, 2026: Erik A. Ahlgren was appointed as the Chapter 7 Trustee to manage the liquidation of the estate’s assets.

Prior to the sale, the property was paralyzed by an extensive list of debts, unpaid taxes, and lawsuits spanning multiple years. The title was weighed down by:

Multi-Million Dollar Mortgages:

·        Watertown Development Company (WDC): Held two mortgages executed by Craig Holdings, LLC in 2021, each for the principal sum of $2,275,000.00. These were later subordinated to Red River State Bank.

·        Red River State Bank (RRSB): Held two mortgages executed by The Ruins, LLC in 2022 for the principal sums of $7,740,000.00 and $2,750,000.00.

Contractor and Mechanic’s Liens: Local and regional contractors filed over a dozen mechanic’s liens between early 2023 and early 2024 for unpaid labor and materials.

Notable claims included:

·        B&W Construction LLC: $575,722.27

·        Perfekt, Inc.: $286,700.00

·        D & M Industries Inc.: $258,473.27

·        Watertight, Inc.: $247,176.70

·        Other claims from Top Finish Carpentry ($162k), Performance Spray Foam ($151k), Lakeside Construction and Masonry ($141k), and The Roofing Company ($128k).

Unpaid Taxes and City Assessments: The property had racked up delinquencies with local government, including:

·        2023 Real Estate Taxes: $32,578.44

·        2024 Real Estate Taxes: $57,060.60

·        2025 Real Estate Taxes: $67,996.25

·        City of Watertown Assessments: $37,454.90 for sidewalk, curb, gutter, and asphalt surfacing improvements.

The property was also entangled in active Lis Pendens lawsuits filed by Diamond Wall Systems, Inc. in September 2023 and Red River State Bank in early 2024 against various Craig-affiliated LLCs and contractors.

On March 13, 2026, the court approved a settlement agreement between the Trustee and Red River State Bank that established a strict “waterfall” hierarchy for how the sale proceeds will be distributed. Judge Hastings’ final June 4 order mandated the following payout structure:

1.    First: Unpaid real estate taxes, city assessments, and any liens holding priority over Red River State Bank’s mortgages.

2.    Second: Customary filing fees and closing costs.

3.    Third: A 5.0% surcharge of the gross sales price paid to the Trustee on behalf of the bankruptcy estate.

4.    Fourth: Approved real estate broker fees.

5.    Fifth: Red River State Bank, up to an established “Mortgage Cap” of $10,490,000.00 plus interest.

6.    Sixth: Watertown Development Company, to pay the debt secured by its mortgages, using any proceeds left over after the RRSB cap is met.

7.    Seventh: Any remaining funds will be turned over to the bankruptcy estate for standard distribution to lower-priority creditors (such as the contractors holding mechanic’s liens) under the Bankruptcy Code.

To expedite the transfer of the property back into Craig’s hands, the court waived the standard 14-day stay, making the order effective immediately.