udge Peter J. Walsh of the United States Bankruptcy Court for the District of Delaware has approved the reorganization plan of Elliott Greenleaf’s client Orleans Homebuilders Inc. through an order of confirmation of the debtors’ plan.
Many homebuilders have filed bankruptcy in recent years. The Orleans bankruptcy seems poised to be one of the only, and certainly the largest, of the homebuilder cases to successfully leave bankruptcy and reorganize. Many other homebuilders have had to liquidate their assets and cease to operate.
The plan gives stock and new secured debt to revolving credit lenders owed $234 million. Unsecured creditors are to receive recoveries from lawsuits and a share in proceeds from sales of properties after secured debt is paid.
The disclosure statement estimated that the revolving credit lenders will recover between 67 percent and 87 percent. Unsecured creditors should see between 3.4 percent and 5.25 percent for voting “yes.” Orleans said in a statement that it intends on implementing the plan and the plan will go effective allowing the company and its many subsidiaries emerging from Chapter 11 before the end of the year.
The plan reduces debt from more than $400 million to less than $200 million. Orleans negotiated the plan with holders of more than 80 percent of the secured debt. Orleans builds homes and condominiums in seven states.
The Chapter 11 filing in March by Bensalem, Pennsylvania based Orleans followed maturity of the revolving credit the month before. Approximately $325 million was owing to the banks at maturity, not including $15 million on letters of credit. The March 31 balance sheet listed assets of $591 million against total liabilities of $560 million.