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Davis counseling LandSource

Former governor will provide advice to its debtors, too

Posted: August 3, 2008 10:26 p.m.
Updated: October 5, 2008 5:02 a.m.
 

Former California Gov. Gray Davis is the strategic adviser for Newhall Land and Farming owner LandSource Communities Development LLC, according to bankruptcy court papers obtained by The Signal.

In the court documents filed in Delaware, Davis has verified that he and the law firm he represents entered into a agreement with LandSource to act, in part, as a sort of troubleshooter to protect Newhall Land's proposed 21,000-unit housing development Newhall Ranch.

Specifically, he asserts in his disclosure to the court that he and his firm worked: "seeking a resolution to any potential objections with regard to the Newhall Ranch Development project."

Davis, who served as governor from 1999 to 2003, signed on as counsel with the Los Angeles-based law firm Loeb & Loeb in 2004 after losing the state election to then-Hollywood actor Arnold Schwarzenegger.

In November 2006, Loeb & Loeb was retained by LandSource for accounting and legal services.

In an affidavit signed Tuesday in the United States Bankruptcy Court in the District of Delaware, the former California governor, representing Loeb & Loeb, accepted an offer from LandSource to "provide strategic legal advice and counsel to the debtors" listed by the land developer in its Chapter 11 petition for bankruptcy protection filed two months ago.

The Newhall Land and Farming Company has been in business in the Santa Clarita Valley for 125 years, first with extensive farming and ranching interests and then with the development of Valencia, one of the most successful planned communities in California. Newhall Land is listed by LandSource as one of its 21 debtors.

Joseph G. "Gray" Davis could not be reached for comment Sunday.

Davis, in his affidavit notarized in Los Angeles and representing Loeb & Loeb, agreed last week specifically to provide: "strategic advice and counsel, which includes meeting with various homeowners, civic, environmental, and governmental entities (county and state)."

LandSource - which plans and develops master-planned communities and transforms land into ready-to-build home sites and commercial properties in Arizona, California, Florida, New Jersey, Nevada and Texas - had attempted for several months to reach agreement with its lenders to restructure its debt. LandSource defaulted on loan payments due April 22.

Among those firms out-of-pocket is Loeb & Loeb itself.

LandSource still owes the law firm $32,666.64 for legal services provided between March and June 8, 2008, when it applied for Chapter 11 protection.

Steering companies out of bankruptcy is something Loeb & Loeb has done in the past.

In agreeing to help LandSource try to get back on track, Davis maintains in his affidavit that he will not "share any portion of the compensation to be received from the debtors with any other person other than the principals and regular employees of the firm," meaning Loeb & Loeb.

On June 8, LandSource Communities Development LLC - a land-development company based in Aliso Viejo in Orange County and owner of Newhall Land - filed a voluntary petition for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington.

Topping the list of 21 debtors linked to LandSource is Newhall Land and Farming Company.

The list also includes: Lennar Stevenson Holdings, LLC; Tournament Players Club at Valencia, LLC; Valencia Corporation; Stevenson Ranch Venture LLC; and Valencia Realty Company.

On June 10, LandSource succeeded in getting most of conditions its lawyers had asked for, including permission to access $35 million to carry on its day-to-day operation and an order from the court advising utilities not to shut off power to the company's various subsidiaries.

Then, on July 22, a week before Davis signed his affidavit, LandSource hammered out a settlement among its secured and unsecured creditors, allowing all involved in the bankruptcy filing to agree on a $1.19 billion secured financing package.

In sealing that deal, United States Bankruptcy Court Judge Kevin J. Carey signed a 75-page order detailing how the nationwide land developer was expected to deal with its creditors.

The bottom line is that LandSource has just under a year to turn things around before its main lender, Barclay's Bank, can foreclose on the company.

Davis, born in New York City, graduated with distinction with a degree in history from Stanford University.
He served in Vietnam as a captain in the United States Army, earning a bronze star for meritorious service.

After the Vietnam war, from 1975 to 1981, he served as chief of staff to Gov. Edmund G. "Jerry" Brown Jr.
Then, from 1983 to 1987, he served in the state Assembly.

Before his four-year stint as governor, Davis served as state controller from 1987 to 1995 and lieutenant governor from 1995 to 1999.

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