Wall Street woes have sent shockwaves through Surrey's Main Street.

The developer of the five-tower Infinity project in North Surrey has filed for bankruptcy protection as a result of the collapse of one of its chief financiers, Lehman Brothers.

The global investment bank filed for bankruptcy Sept. 15 after the U.S. Treasury Department refused to bail it out in the midst of the global credit-market meltdown.

Wednesday's announcement by Jung Developments Inc., the developer of Infinity, has thrown the future of two highrises – which are part of the second phase currently under construction – into question.

The development is located at the King George SkyTrain station.

"A significant contributing factor was the Lehman Brothers insolvency and the fact that they were providing the primary funding under the construction over the summer," said Robert Millar, the lawyer representing Jung Developments.

"Once the funding from them was terminated, Jung didn't have sufficient monies to pay the contractor and we couldn't ask them to continue pouring money into the project until we took steps to get the company reorganized."

Millar says the move to seek bankruptcy protection isn't because of mismanagement of the project.

"It's got nothing to do with cost overruns," he said. "Because there's a quality builder in there, ITC Construction, and they've adhered, as far as I understand, to their construction budget."

"So it's not like many developments where the costs escalate. It's been kept under control. It's just the source of the funding has dried up."

The 540 pre-sale purchasers, who have already put down money on units in the two towers currently under construction, have nothing to be concerned about, Millar insists.

"Their deposits are safe, their money is in trust," he said.

The restructuring plan, being carried out by PricewaterhouseCoopers, will involve either securing additional sources of funding or finding a local developer who is "well-versed in tower construction to step in and partner with Jung" in order to see the second phase through to completion, Millar said.

So far, he added, Jung Developments has had discussions with "three developers of one form or another" who might be potential participants in such an arrangement.

The cost to complete the two towers in phase two of Infinity is estimated at just under $100 million, he said. Ultimately they will be worth about $170 million.

Currently the two towers – with 690 combined units – are built up to the 21st and 25th floors respectively.

Infinity's first phase, consisting of one building, has already been completed, sold and occupied.

Construction has not begun on the third phase, which will feature another two towers.

The total cost of the entire project is pegged at around $350 million.

South Korean businessman Hee Yong Yang, director of Jung Developments Inc., is also the developer of the Sky Towers, 36-storey and 40-storey highrises – the tallest between Calgary and Vancouver – that are to be built across the street from Infinity, near King George Highway and Old Yale Road.

rstarr@surreyleader.com