Woodside Group, which was forced by its unsecured creditors to file for Chapter 11 bankruptcy court protection in September 2008, has proposed that it hand over the keys to the company to its creditors, relinquishing interest in the privately held Utah-based company.

The company's reorganization plan, which was filed last week in the U.S. Bankrupcty Court for the Central District of California, will be voted on by creditors and then ruled on by the judge.

"At the end of the day, the banks and the note holders are going to be majority owners of the company," said Jennifer Mercer, who was hired by Woodside to be the company's spokesperson during the bankruptcy.

The move came as no surprise to the creditors who filed to push the company into involuntary bankruptcy in August 2008. Five insurance companies, which hold more than an estimated $400 million of the company's bonds, and JPMorgan Chase Bank, representing a consortium of 14 other bank lenders owed approximately $330 million, joined together in the petition. With that much debt, it's likely that the current owners of the company had no equity left in the entity.

"The creditors have known for some time that the debtor was probably going to be proposing a plan that turned over control of the company to unsecured creditors," Don Gaffney, a partner with Snell and Wilmer, the law firm representing the unsecured creditor committee, said Tuesday, Jan. 20. "The next step will be talking about the real hard mechanics of the transition, what parts of the company stay in position, and, in terms of company management, it is anticipated there will be some changes."

Gaffney said the company had few secured creditors and that it had, for the most part, managed to keep its day-to-day supplier and contractor bills paid, leaving the banks and bond holders as the major creditors.

Woodside is one of the largest privately held builders in the U.S. It was ranked No. 7 in revenue with $1 billion in sales during 2007 on the Builder 100 top private builder list. With 2,703 closings, the company was ranked No. 8 in unit sales.

Founded in 1977, Woodside has a wide footprint, building in high-growth states as well as more stable markets. According to its website, the Utah-based company builds in Arizona, California, Colorado, Florida, Maryland, Minnesota, Nevada, Texas, Utah, and Virginia.

It also has exposure in some sizable ailing joint ventures in the Las Vegas area, Inspirada and Kyle Canyon, both Focus Property developments with consortia of big builder partners.