South Edge and Focus South Group global settlement approved by court

By Caroline Salls

Pittsburgh, Oct. 18 - South Edge, LLC received court approval of a global settlement that removes nearly all obstacles to confirmation of a reorganization plan, according to documents filed Monday in the U.S. Bankruptcy Court for the District of Nevada.

The settlement severs ties between South Edge and Focus South Group, LLC.

Cynthia Nelson, the Chapter 11 trustee, said in the motion that the South Edge project, a joint venture among several builders to erect a development on 2,000 acres in Henderson, Nev., was embroiled in "contentious disputes and litigation by and among its primary constituents." Those disputes led to the involuntary bankruptcy petition and the appointment of a trustee.

The global settlement offered on Oct. 6 resolves all but one of the outstanding issues and clears the path for plan confirmation, Nelson said in the motion.

Under the settlement:

• The Focus adversary proceeding will be resolved by a final judgment that provides that $21 million of disputed cash deposits is the property of the estate and the balance $5 million is the property of Focus;

• The settling builders - KB Home, Toll Brothers, Inc., Weyerhaeuser Real Estate Co. and Beazer Homes Holdings Corp. - will pay the Focus parties $35.5 million. South Edge will pay Focus $5 million;

• The settling builders will obtain all rights, titles and interests of Focus in a $36.8 million judgment Focus won in a civil case, in all claims Focus holds against South Edge and in any intellectual property rights related to the debtor or the project;

• Focus parties will be deemed to have resigned from any position held with South Edge and will have no management or voting rights;

• Focus will support confirmation of South Edge's plan; and

• Focus will cooperate with the settling builders and purchaser in connection with future development of the project.

South Edge is a joint venture between KB Home wholly owned subsidiary KB Home Nevada Inc. and a third-party property management firm.

An involuntary bankruptcy case was filed against South Edge on Dec. 9, 2010. The Chapter 11 case number is 10-32968.

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