WCI Communities Inc. last week disclosed in a filing with the Delaware Bankruptcy Court that is estimates it faces $40 million in claims related to the installation of defective Chinese drywall in about 200 homes.
The company, which is in Chapter 11, said it was setting up a "drywall trust" to deal with the claims and get the liability off the balance sheet of a reorganized WCI. The company would establish "allowed Chinese drywall claims," and each holder of such would get a pro rata share of 100% of the Chinese Drywall Trust interests. WCI will contribute $900,000 cash to be used for the administration of the trust; newly issued WCI preferred B stock; and proceeds from insurance and the results of litigation the company has against manufacturers, distributors and subcontracted installers of the drywall.
In the filing, which was made on July 17, the prospects for recovery of claims related to the drywall issue were listed as "uncertain."
Lennar Corp. recently set aside nearly $40 million to deal with remediation of drywall claims on an estimated 400 homes.
WCI last month filed a restructuring plan. with the court that it said would "it said would make the company "a de-leveraged lifestyle community developer and land holding company with the flexibility to navigate its business during these unprecedented times and beyond."