Michael Rehaut, home building analyst at J.P. Morgan, was out with a research alert Thursday that reported a deal among some, but not all, the homebuilders involved in the bankrupt South Edge LLC joint venture at the stalled Inspirada project in Henderson, Nevada.

"On June 10, [KB Home] KBH, several other members of the South Edge JV, and several of the lenders entered into a consensual agreement for a reorganization of the South Edge JV bankruptcy, to which the Chapter 11 trustee has expressed its support," Rehaut wrote in the alert. "While certain members of the JV, including Meritage and Focus South Group, as well as lenders holding less than 8% of the loans related to South Edge are not part of this agreement, we believe the likelihood is relatively strong that the plan will nonetheless be approved, given the support of the Chapter 11 trustee."

The lead lender in the group that forced South Edge into bankruptcy is J.P.Morgan.

Rehaut viewed the deal as a positive for KB, noting that the company has estimated its total net obligation to the plan at between $216 million and $240 million, only slightly above its current reserve of $212 million.Rehaut said in the alert that under the proposed plan, KB would acquire 65-68% of the underlying land of South Edge, which was valued by the company at $75 million, representing a partial offset to its $212 million reserve.

Meritage on June 9 signaled its intention to contest the deal when it announced it would fight an attempt by the lenders and JV partners to force payment of $13.2 million related to South Edge. In his alert, Rehaut said Meritage's stake in the venture was 3.5%, while Focus South Group held 15.6%.