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William Lyon Homes prepares for Chapter 11

As part of its recapitalization plan, the company is soliciting votes from shareholders

by Caitlin AdamsPublished: November 21, 2011 02:30 PM

On Friday, Newport Beach-based William Lyon Homes, a large homebuilder specializing in the Southwestern states, is soliciting votes from shareholders on a prepackaged restructuring plan that will enable the company to reorganize its debt.

The move so far has support from the majority of the company’s stakeholders, a senior secured lender, and the Lyon family, who have signed agreements in support of the recapitalization plan. The solicitation that went out to shareholders on Friday is meant to explain the transaction and reassure interested parties of the company’s ability of meeting all its obligations. As of Nov. 4, approximately 64 percent of the company’s stakeholders had signed off in approval of the plan.

“As the next step in completing our recapitalization, William Lyon Homes is pleased to commence the solicitation of votes for our recapitalization plan,” said company CEO, General William Lyon. “We are confident these efforts, supported by an overwhelming majority of our noteholders and senior secured lender, will strengthen the company and position William Lyon Homes as an industry leader now and in the future.”

The company expects to collect all votes by mid-December, at which time it will move ahead with a “prepackaged Chapter 11 case,” with the entire process expected to close by the end of the first quarter of 2012. The goal is to have a swift conclusion of the proceedings and, as stated by the company, was set in motion to ensure that William Lyon Homes remains a leader in the homebuilding industry “for years to come.”

According to the OC Register, a key part in the reorganization plan is the loan restructuring that will probably turn over majority control of the family-owned company to a New York hedge fund.

The recapitalization process has not interrupted business as unusual; on Nov. 16, William Lyon Homes acquired an option agreement on two new community projects in South Orange County, representing 194 single-family attached units ranging from 950 to 1,500 square feet. The two locations are expected to open in early 2013.

“During this process and beyond, the company will continue to build, sell and complete homes as it has for the last 55 years,” said William H. Lyon, the company’s COO. “This recapitalization plan provides that our employees will be unaffected, our vendors will be paid in full, our business relationships will be honored and that we will continue to support and honor our warranties. It provides a platform for William Lyon Homes to continue its long legacy of quality and service.”

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