As promised to its creditors, Woodside Homes put itself, and its subsidiaries, into Chapter 11 bankruptcy by its Tuesday Sept. 16 deadline by filing yesterday with the U.S. Bankrupcty Court for the Central District of California.
On Aug. 20, five insurance companies--holders of more than $475 million of Woodside's notes--filed a petition to force the builder into involuntary bankruptcy so they could collect their debts. Two days later, JPMorgan Chase Bank, as agent for itself and 14 other bank lenders of $330 million to the home builder, joined the petition.
Rather than oppose the requests, on Aug. 27 Woodside, one of the top-10 private builders in the U.S., said it would cooperate, putting itself into bankruptcy court reorganization by Sept. 16.
"We are consenting to agree that by Sept. 16 we will file for voluntary Chapter 11," Jennifer Mercer, a spokesperson for the builder, said at the time.
While the case is working its way through the system, a bankruptcy judge has given the company permission to continue its home building business as usual, using its cash on hand to continue paying employees, vendors, and subcontractors to sell and build homes. Now that the company has officially filed for Chapter 11 protection, the judge will consider operating guidelines again on Friday Sept 19 during a first hearing in the case.
"Both the company and the noteholders and the lenders want to ensure as little disruption to our subcontractors, to our vendors as possible," said Mercer, who was hired as spokesperson for the publicity-shy company in the wake of the bankruptcy filing.
What the company won't be doing under the court-prompted agreement with its lenders is selling off any of its big assets or buying any new land. It will be providing its creditors with accounting of its financial activities.
Founded in 1977, Woodside has a wide footprint, building in high-growth states as well as more stable markets. According to its Web site, the Utah-based company builds in Arizona, California, Colorado, Florida, Maryland, Minnesota, Nevada, Texas, Utah, and Virginia.
It also has exposure in some giant ailing joint ventures in the Las Vegas area, Inspirada and Kyle Canyon, both Focus Property developments with consortiums of big builder partners. It also is active in Las Vegas Lakes.
Woodside 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.