John Laing Homes declares bankruptcy
WL Homes, aka John Laing Homes, filed for bankruptcy today (Feb 20), saddled with more than $350 million of secured debt to lenders. Email adria@homebuilder-bankruptcy.com for a copy of the debt structure and banks’ exposures. Quick summary of things that buyers should know about:
- The home builder had made the strategic decision to focus on select projects in Southern California and Laing Luxury, and exiting other projects. It has also filed a motion to auction off undeveloped and partially developed properties.
- As typical of most 1st day motions of bankrupt home builders, WL Homes sought authorization to continue to sell homes free and clear of liens.
- WL Homes has sought permission to honor pre-petition obligations to customers – Customer Care Programs (warranties), sales incentives programs and payments of HOA fees, as part of its bid to create a “business as usual” atmosphere to sell new homes. According to court filings, the home builder accrued approximately $7.67 million to pay Customer Care claims. For more specifics on this issue, email adria@homebuilder-bankruptcy.com
- To remain a going concern, the home builder is proposing to obtain DIP financing from Emaar Properties (a Dubai company which is also the owner of WL Homes). This post-petition credit facility will help determine whether the company can honor its obligations and payments.
Some numbers for those of you who are investors – the Chief Restructuring Officer commented that the expected rate of return on investment for such distressed assets is approximately 18-20%, and that such residential properties are routinely sold in bulk to speculators at 20-25 cents on the dollar.
For more details, visit our sister site, The Downturn Analyst.com where there is fuller coverage.
Jun’09 News Flash: John Laing Homes Going into Liquidation; Fire Sales Expected.
Can anyone confirm the identities of the select projects in Southern California that the builder is continuing to operate? I keep reading about John Laing Homes walking away from projects.
Adria, thanks for providing the list of confirmed Abandoned Projects! At least we know which are the ones where we probably shouldn’t go near.
I’ve always thought that homebuilders deserve some kind of government support. Yet knowing that Emaar, a foreign company, owns John Laing Homes, makes me wonder how we can efficiently use taxpayer money to do so. Perhaps if we reform bankruptcy law, we can relieve pressure on the housing industry without having to actually just give money to the homebuilders?
Actually, the prices of distressed residential assets which hedge funds and other speculators are asking for is more like 8-10 cents on the dollar. We have a fundamental problem where the banks are reluctant to sell at firesale prices and speculators are unwilling to pay more for these properties. Bottomline: There is no market.
Obama’s economic stimulus package is supposed to address such macro issues. However, the attention is mainly on foreclosure sales for individual mortgages, not distressed assets of bankrupt home builders.