Judge Tentatively Approves Lennar Plan
LandSource Communities, the parent corporation of Lennar Corp and Newhall Land, could emerge from bankruptcy with a 15 percent interest in the Newhall Ranch Project if creditors approve the purchase.
Judge Kevin J. Carey ruled yesterday that homebuilder Lennar Corp. would be allowed to purchase 15 percent of the Newhall Ranch project and other properties for $140 million, if a majority of the creditors vote in their favor.
Those creditors are expected to vote on the reorganization plan for LandSource ahead of a July 13 confirmation hearing.
Newhall Ranch is a proposed development with 21,000 homes planned for 15,000 acres. A 60-day review of the project’s environmental impact report is currently underway (see full story here ) and will conclude June 26. A public hearing to discuss the report is scheduled at 6:30 p.m. on Thursday, June 11 at Rancho Pico Junior High School.
Investors in LandSource include the country’s largest public pension fund, the California Public Employee Retirement System (CalPERS), which holds a 68 percent interest in the company. Should the reorganization plan be approved by a majority of creditors, the pension fund would lose all of its investment.
Officials reassured CalPERS members that their investment represents less than half of one percent of the pension fund’s overall investment portfolio.
LandSource filed for bankruptcy protection in June 2008 after defaulting on loan payments in April 2008.
The filing came after several months of negotiations with lenders in an attempt to modify and restructure the company’s debt, according to a release from LandSource. The problems began April 22 when LandSource defaulted on loan payments. According to Standard and Poor, the company’s cash had declined to $25 million from about $115 million in early February.