WCI Community’s Chapter 11 filing includes drywall problems

BONITA SPRINGS, Fla. – July 20, 2009 – WCI Communities, Inc. announced on Friday that the Delaware Bankruptcy Court presiding over its Chapter 11 case approved the adequacy of its disclosure statement for its plan of reorganization. At the same time, WCI announced that agreements had been reached between the major players, including a group of homeowners claiming damages related to Chinese drywall.

The Court’s approval paves the way for WCI to begin soliciting votes to accept its plan of reorganization, which should be mailed this week. The deadline for returning ballots is Aug. 19, 2009; a hearing to confirm the plan is scheduled for Aug. 26, 2009.

“With the voting process about to begin, and with the firm support of our primary constituencies, WCI is squarely on track to emerge from Chapter 11 as a deleveraged lifestyle community developer and land holding company with the flexibility to navigate its business during these unprecedented times and beyond,” says David L. Fry, interim president and chief executive officer.

Under the plan seeking final approval, WCI’s senior secured lenders would receive new first lien debt in the aggregate amount of $450 million, which includes a $150 million payment-in-kind (PIK) component, and an initial 95 percent equity stake in the reorganized company. The company’s unsecured creditors would share the remaining 5 percent, with their share increasing once the new debt is fully retired up to a maximum of 34 percent once secured lenders receive the amount currently owed to them.

WCI included a Chinese drywall agreement in the plan after reaching an agreement with the lead attorneys representing drywall claimants. The not-yet-approved plan would create a Chinese Drywall Trust and allow the drywall claimants to pursue causes of action related to the manufacture and installation of defective imported drywall in their homes.

© 2009 FLORIDA ASSOCIATION OF REALTORS®

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