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Bankruptcy plan would liquidate properties

Posted: October 16, 2008 10:25 p.m.
Updated: December 18, 2008 5:00 a.m.
 
A plan filed in a bankruptcy court could lead to the sale of several high-profile SCV properties. Barclays Bank proposed a liquidation plan to turn all assets owned by LandSource Communities Development LLC into cash to pay its biggest creditors, a U.S. Bankruptcy Court in Delaware heard this week.

Among LandSource's holdings is the Newhall Land and Farming Co., which developed Valencia and still plans to build Newhall Ranch in the western Santa Clarita Valley.

Barclays invested $1.55 billion in March 2007 to finance LandSource in a joint venture between Lennar Corporation, LNR Property Corporation and MW Housing Partners.

Now the British-based bank has introduced a detailed plan to get its money back.

The plan is expected to be one of several proposed by principal players in the LandSource bankruptcy hearings, with each plan scrutinized by all involved.

The Barclays Bank plan offers details of how assets should be assessed and turned into cash, and how that cash should be distributed among first lien lenders - those firms owed the most amount of money.

LandSource had a four-month window of opportunity, called the "exclusivity period," during which it could have submitted its own proposed plan.

But the firm instead let the deadline lapse on the understanding that it was following all the conditions spelled out by Barclays.

If the bankruptcy court judge were to approve Barclays liquidation plan, assets belonging to LandSource could be sold 120 days later.

In June, LandSource filed for Chapter 11 bankruptcy protection, naming 21 of its subsidiaries as debtor firms including: Newhall Land and Farming; Tournament Players Club at Valencia LLC; the Valencia Corporation; Stevenson Ranch Venture LLC; Southwest Communities Development LLC; Valencia Realty Company; and NWHL GP LLC.

Objections to Barclays' plan must be filed in court by Oct. 29.

The plan names Barclays Bank PLC as "administrative agent for the first lien pre-petition and post-petition credit agreements."

Under the Barclays proposal, whoever would be named by Barclays and approved by the court to be the administrator of its liquidation plan would "act as the trustee for the liquidating trust, hold and liquidate all of the estate assets contributed to the liquidating trust for the benefit of the holders of allowed claims."

It's the timing of Barclays' plan unveiling that has some affected parties scratching their heads.

"If they were trying to make a statement, we're not sure what kind of statement they were trying to make," said Debra A. Dandeneau, a partner in the Business Finance & Restructuring office of New York law firm
Weil, Gotshal & Manges LLP, chosen by Lennar and approved by the judge.

"It's a hollow statement," she said. Hollow, that is, until Barclays submits its required disclosure form.
Barclays, in filing its plan, addresses this procedural requirement up front.

In bold letters printed at the top of its proposed plan, Barclays lawyers state: "No disclosure statement has been approved by the bankruptcy court with respect to this plan. Accordingly, the filing of this plan should not be construed as an authorized solicitation of votes on this plan."

Barclays is making no attempt to sway prospective voters among the various creditors called on at a later date to vote for the best plan to re-structure LandSource.

Two separate spokesmen for Barclays in New York City said they could not comment on the court case when asked about the timing of the Barclays filing.

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