Kimball Hill disclosure statement approved; plan confirmation hearing March 9

By Caroline Salls

Pittsburgh, Jan. 21 - Kimball Hill Homes, Inc. obtained court approval of the disclosure statement for its Chapter 11 plan, according to a Wednesday filing with the U.S. Bankruptcy Court for the Northern District of Illinois.

The plan confirmation hearing is scheduled for March 9.

Under the plan, Kimball Hill will create a post-consummation trust and a liquidation trust, with post-consummation trust net proceeds to be distributed to holders of senior credit agreement claims and net proceeds of the liquidation trust to be distributed to holders of senior credit agreement claims and some unsecured claims.

Treatment of creditors under the plan will include:

• Holders of DIP facility claims, administrative claims and priority tax claims will receive full payment in cash;

• Holders of senior credit agreement claims will receive a share of the interests in the post-consummation trust, a share of cash payment to be made on account of a $10 million diminution claim, a share of 64% of the proceeds of the sale of the company's unencumbered assets and 100% of the liquidation trust series A interests;

• Holders of other secured claims and secured bank claims will be paid in full either in cash or through the return of the collateral securing the claim;

• Holders of priority non-tax claims will receive cash from the collateral securing the claim;

• Holders of senior unsecured claims and general unsecured claims will receive a share of 36% of the proceeds from the sale of the company's unencumbered assets, 100% of the liquidation trust series B interests and a share of a $3.9 million committee settlement payment;

• Holders of unsecured senior subordinated note claims will receive $2.1 million of the committee settlement payment unless they vote to reject the plan, object to confirmation or appeal plan confirmation, in which case the payment will revert to holders of series B liquidation trust interests and these creditors will receive no distribution; and

• Holders of subordinated debt securities claims, interests, intercompany claims and intercompany interests will receive no distribution under the plan.

Kimball Hill, a Rolling Meadows, Ill.-based homebuilder, filed for bankruptcy on April 23, 2008. Its Chapter 11 case number is 08-10095.

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