The handwriting was on the wall for John Laing Homes. Earlier this year, the Southern California-based builder stopped building and selling homes in several markets, laid off employees, and hired a business consultant experienced with Chapter 11 bankruptcies.
And today Laing filed for bankruptcy in U.S. Bankruptcy Court in Delaware, seeking protection from tens of thousands of creditors and between $500 million and $1 billion in liabilities. It says it has more than $1 billion in assets.
Ironically, Laing's largest unsecured creditor is former CEO Larry Webb, who is still owed $1.2 million in “an “employee-related obligation.”
But Webb is just one of between 25,000 and 50,000 creditors owed money by John Laing, which is the business name for the corporate entity called WL Homes. The voluntary petition also covers Laing’s urban and luxury divisions and mentions concurrent bankruptcy filings for John Laing Homes affiliates in Texas, Arizona, and elsewhere.
The company owes $351 million in secured debt to lenders, according to the filing. That includes $132 million to Bank of America, the lead lender in a multi-bank credit line that includes Bank of the West, National City Bank, City National Bank, and First Horizon Bank. Laing also owes $75 million on a second multi-bank credit line, this time led by Wachovia. Lenders on this credit facility also included Key Bank, AmSouth/Regions Bank, California Bank and Trust, Comerica Bank, Franklin Bank, and PNC Bank.
WL Homes, which does business under the Laing name, is owned by Dubai-based Emaar Properties, which recently posted a loss for 2008’s fourth quarter due to its struggling U.S. businesses. The foreign parent, which has invested more than $600 million in the U.S. builder since its 2006 purchase, indicated in December that it would no longer fund Laing on an unsecured basis, leaving the builder in a precarious financial position.
Alison Rice is senior editor, online, at BUILDER magazine.