WL Homes files bankruptcy amid downturn in construction industry

By Caroline Salls

Pittsburgh, Feb. 19 - WL Homes, LLC filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Delaware.

According to court documents, the company's financial condition has been significantly affected by the downturn in the residential construction industry.

WL Homes chief restructuring officer Bradley D. Sharp said in a declaration filed Thursday that the impact of the housing downturn has been offset by substantial investments made by parent company Emaar America Corp., but continued requests for loan pay downs and the inability to extend maturity dates on other loans has left the company in a "precarious cash position."

In connection with the filing, the company is requesting court approval of $30.88 million in debtor-in-possession financing from Emaar America Corp., including interim access to $5.29 million of the financing.

WL Homes said the DIP financing will allow it to pay employees, suppliers and service providers, continue development of real estate projects, preserve the going-concern value of its business and conduct an orderly sale of some assets.

Interest will be Prime rate plus 100 basis points.

The facility will mature in 12 months, or earlier if the company fails to confirm a plan of reorganization by Sept. 30, 2009.

WL Homes said it had $1.3 billion in assets and $977 million in debt as of Nov. 30.

The company's largest unsecured creditor is Lawrence Webb, Newport Coast, Calif., with a $1.2 million employee-related obligation claim. WL Homes did not list any other creditors with claims of $1 million or more.

WL Homes is an Irvine, Calif.-based homebuilder. Its Chapter 11 case number is 09-10571.

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