Orleans Homebuilders Inc., the 92- year-old Bensalem, Pennsylvania-based homebuilder, won court approval of its restructuring plan cutting its debt by more than half to less than $200 million.
U.S. Bankruptcy Judge Peter J. Walsh gave the company approval after wording changes were made to the turnaround plan, according to court documents filed today in Wilmington, Delaware.
“All of the impaired voting classes voted overwhelmingly to accept the plan,” Joel Levitin, a lawyer for the homebuilder told Walsh at a hearing yesterday, when they were seeking confirmation of the recovery plan.
Secured lenders with claims of about $145 million will get all of the reorganized company’s equity, for a projected recovery of 67 percent to 87 percent, according to the plan. The lenders also have a claim of about $113 million that will get nothing.
Unsecured creditors, which voted 98.6 percent in support of the plan, are expected to get about 3 to 5 cents on the dollar. The creditors, owed about $166 million, will share a $6 million fund, according to court papers. They will also get any recoveries from lawsuits and proceeds from home sales once the lenders have been paid.
Current stockholders won’t get anything under the plan and the shares will be canceled.
Orleans abandoned a $170 million sale to competitor NVR Inc. to pursue a restructuring plan with a majority of its secured creditors. The resulting plan reduces its debt from more than $400 million to less than $200, according to an Aug. 12 statement.
The company will use a $155 million financing package to fund its exit from bankruptcy, according to court documents. The company will borrow a $125 million term loan and a $30 million revolving credit facility. The homebuilder may have more than $40 million in liquidity upon exiting bankruptcy, Levitin said at the hearing.
Orleans Homebuilders, which has been building homes in Pennsylvania and New Jersey for more than 90 years, was founded by Alfred P. Orleans in 1918, according to its website. The company started expanding in 2000 and builds condominiums, townhouses, and single-family homes in New York, Illinois, Pennsylvania, New Jersey, Virginia, Florida and North and South Carolina.
The company listed about $440 million in assets and about $498.8 million in debt as of Dec. 31 according to a statement filed March 1, the same day it sought bankruptcy protection. The builder was forced to seek bankruptcy after failing to win the unanimous consent required from its 17 lenders to extend the maturity of its $350 million loan.
The case is In re Orleans Homebuilders Inc., 10-10684, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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