LandSource lender agent files amended plan based on $140 million investment, not asset sale

By Caroline Salls

Pittsburgh, May 7 - LandSource Communities Development LLC lender agent Barclays Bank plc filed a plan of reorganization and related disclosure statement for the company's Chapter 11 case Tuesday under which Lennar Corp. will make a $140 million investment in the reorganized company, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

In exchange for its investment, Lennar will receive 15% of new common stock, specified acquired assets and $13.5 million in claims.

The remaining 85% of the new common stock will be split, with rights offering participants to receive 56% and holders of first-lien, second-lien and general unsecured claims to receive 29%.

According to the amended disclosure statement, the Lennar acquired assets will include 100% of the equity interest in Lennar Mare Island, LLC, Friendswood Development Co. and LLPII HCC Holdings, LLC; 50% of the equity interests in Lennar Wincrest, LLC held by LLP II Holdings LLC and 75% of the net proceeds of a DLA Piper lawsuit.

In addition to the Lennar investment, the proposed plan calls for a $140 million rights offering, to be backstopped by members of a steering committee.

As previously reported, Lennar's original plan called for the sale of LandSource's assets, with proceeds to be used to pay off the company's debtor-in-possession credit facility and distributed to creditors.

Under that plan, a liquidating trust was to be established, and all remaining assets and causes of action were to be transferred to the trust on the plan effective date.

Creditor treatment

Treatment of creditors under the amended plan will include:

• Holders of administrative expense claims, priority tax claims, permitted lien claims and priority non-tax claims will receive full payment in cash;

• Holders of first-lien and second-lien secured claims will receive a share of the equity in the reorganized company and the right to participate in the rights offering, as opposed to the secured claim proceeds and the right o credit bid for the company's assets called for under the original plan;

• Holders of non-Newhall debtors' general unsecured claims and Newhall unsecured claims will receive their share of new equity and the right to participate in the rights offering. Under the original plan, general unsecured creditors were scheduled to receive general unsecured claim proceeds;

• Holders of convenience claims will recover 50% in cash, reduced from 100% under the previous plan;

• Intercompany claims will be either cancelled or reinstated, at the company's option; and

• Interests will be cancelled, and holders will receive no distribution.

LandSource, a Los Angeles-based developer of master-planned communities, filed for bankruptcy on June 9. It Chapter 11 case number is 08-11111.

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