Kimball Hill liquidation plan takes effect

By Caroline Salls

Pittsburgh, March 24 - Kimball Hill Homes, Inc. emerged from Chapter 11 bankruptcy when its plan of reorganization took effect on Tuesday, according to a filing with the U.S. Bankruptcy Court for the Northern District of Illinois.

The plan was confirmed on March 12.

As previously reported, 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.

Plan creditor treatment

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; 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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