The former CEOs of John Laing Homes and Warmington Homes are on deck to manage the assets of LandSource Communities through bankruptcy reorganization.
The California-based land developer has asked a bankruptcy court judge to appoint Timothy P. Hogan, formerly of Warmington, and H. Lawrence (Larry) Webb, once with John Laing, as co-chief restructuring officers.
The company's creditors' steering committee had asked to hire experienced managers, who are independent of the current debtor's managers from Lennar Homes and LNR Property Corp. and from the creditors "to enable them to provide unbiased insights with respect to the various restructuring options for the debtors," the bankruptcy court document said.
The judge will hear the request on Aug. 19. His approval would make formal what has actually already started. HoganWebb LLC has been working since July 1, defining what services they would provide as restructuring officers.
Under the proposed agreement, they would perform a financial review, help develop restructuring plans and other alternatives to maximize the value of the business, work as the main contact for financial and operational issues, as well as a variety of other tasks. For that first phase, the pair will be paid $120,000 a month.
If the company fails to develop a reorganization plan by certain deadlines, the contract will kick into phase two and Webb and Hogan will become the sole members of the executive committee. For that they would be paid $170,000 a month.
HoganWebb would be paid a $1 million bonus if the bankruptcy court confirms a reorganization plan on or before June 7, 2009.
Hogan and Webb were selected after an extensive search because they are considered neutral, with no significant ties to either the debtor or creditors.
Hogan recently left his position as CEO of Warmington, where he had worked since 1980, specializing in land acquisition and finance. He was president from 1987 to 2007 and was appointed chairman and CEO in 2007.
Recently, he formed TPH Enterprises, a consulting firm specializing in financial consulting and asset and project management.
Webb was CEO of WL Homes, which does business as John Laing Homes, from 1998 until last June. Before becoming CEO, Webb was president of John Laing Homes' California division, overseeing operations for residential developments throughout California.
Neither Hogan nor Webb could be reached for comment.
LandSource, a planner and developer of master planned communities in California, Florida, Arizona, New Jersey, and Nevada, is a prime example of a company that was sold and financed as the market peaked, only to watch its value plummet within months after its sale.
When Lennar and and LNR Property sold the majority of their interest in the company to a partnership formed by MacFarlane Partners, CalPERS, and Weyerhaeuser Real Estate in February 2007, the company was appraised at $2.6 billion. By January 2008, that value had plummeted to $1.8 billion, triggering violations of the company's loan covenants.
Lennar and LNR retain a 16% interest in LandSource.
After failing to reach an agreement with its lenders on how to resolve financial difficulties caused by a real estate market that continues to decline, LandSource filed for Chapter 11 bankruptcy protection in early June.