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. Bankruptcy 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, 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 said it would cooperate by 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 spokeswoman 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.
"The company and the noteholders and the secure lenders want to ensure as little disruption to our subcontractors [and] our vendors as possible," said Mercer, who was hired as a spokeswoman 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 big assets or buying 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.
The company 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 during 2007 among private builders on the BUILDER 100, with $1 billion in sales. With 2,703 closings, the company was ranked No. 8 among private builders in unit sales.
Teresa Burney is a senior editor at BIG BUILDER magazine.
Learn more about markets featured in this article: Las Vegas, NV.