WCI Communities plan of reorganization approved, to emerge Aug. 31

By Jennifer Lanning Drey

Portland, Ore., Aug. 26 - WCI Communities, Inc. received court approval of its plan of reorganization Wednesday from the U.S. Bankruptcy Court for the District of Delaware.

The company expects to emerge from bankruptcy on Aug. 31, according to a company news release.

Under the plan, WCI's senior secured lenders will receive $450 million of new debt and an initial 95% equity stake in the company.

Unsecured creditors will receive interests in a litigation trust and an initial 5% equity stake in the company that could increase to as much as 35% depending on the results of future operations, according to the release.

As a result of the plan, the company said it will eliminate more than $2 billion of debt and liabilities from its balance sheet.

"WCI, along with its major constituent groups, have worked together to fashion a plan that allows us to emerge as a deleveraged lifestyle community developer and land-holding company and ensures that recoveries are allocated fairly among the company's stakeholders," David Fry, chief executive officer of the company, said in the release.

"The flexibility granted under the plan allows WCI to navigate its business during these unprecedented times and beyond."

Creditor treatment

Treatment of creditors under the plan will include:

• Holders of administrative claims, tax claims and priority claims will recover 100% in cash;

• Holders of pre-bankruptcy lender claims will receive new senior term notes, new senior subordinated PIK notes and 95% of the shares of the reorganized company;

• Holders of $28.6 million in secured claims will recover 100% in cash, plus interest;

• Holders of $979.8 million in general unsecured claims will receive all of the interests in a creditor trust, which will receive $1 million in cash for estate administration, 5% of new common stock, a share of new preferred stock and a share of avoidance action proceeds;

• Holders of convenience claims will recover 2% in cash;

• Holders of $40 million in Chinese Drywall claims will receive a share of Chinese Drywall trust interests, including $900,000 in cash to administer the trust, new preferred B stock and proceeds from insurance coverage actions and recoveries and Chinese Drywall actions;

• Holders of WCI equity interests will receive no distribution; and

• Equity interests in other debtors will be reinstated.

WCI, a Bonita Springs, Fla.-based home building and real estate services company, filed for bankruptcy on Aug. 4, 2008. Its Chapter 11 case number is 08-11643.

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