Irvine-based builder John Laing Homes was worth more than $1 billion just three years ago.
Now, a majority of the bankrupt builder? remaining assets?ncluding a handful of projects in some of Orange County? newer developments?ikely can be bought for less than $20 million next month, assuming an auction proposed by the company gets court approval.
John Laing is working to get a Delaware bankruptcy court to sign off on a plan to sell off most of its remaining assets, which consist largely of unfinished home lots in about 30 different Southern California projects.
Local assets include lots and homes in Irvine? Woodbury and Portola Springs developments and San Clemente? Talega development.
Largely because of the nearly $400 million of bank debt and other development-related obligations still tied to the land, most of John Laing? OC assets essentially have no real value, according to court documents.
The company? most valuable OC asset is one remaining lot the company? luxury division has in the upscale Crystal Cove development. That property has a liquidation value of about $2.9 million, filings show.
All told, the company? going net concern value?he value of a company? operations?s now estimated at about $12.5 million, according to filings made with the bankruptcy court by Chief Restructuring Officer Bradley Sharp.
That? a far cry from 2006, when Dubai-based Emaar Properties PJSC paid $1.1 billion for the builder near the peak of the housing market
John Laing filed for Chapter 11 bankruptcy in early February, after being cut off from funding by Emaar?hich had invested another $600 million in the company following the acquisition?s well as lenders.
The company pared back operations before and after the bankruptcy filing and exited homebuilding in Colorado, Arizona and Texas.
It now counts a relatively small number of Southern California developments. The company has less than 100 employees remaining, down from more than 1,100 a few years ago.
Sharp is recommending that the court approve a plan to auction its remaining assets later next month.
More than 80 prospective bidders have inquired about buying some or all of John Laing? assets, the company said. But it appears John Laing wants its remaining holdings to stay under its parent company? control once all is said and done.
The company? plan proposes that an affiliate of Emaar would be the stalking horse bidder for the auctioned assets, which would be sold in a package deal, not individually.
Stalking horse bidders are selected by bankrupt companies to make an initial, opening bid on assets and ward off lowball offers. They can end up as the winning bidder.
Emaar has agreed to a minimum bid of about $7 million in cash for the auction, plus the assumption of debt.
That plan is opposed by the bankrupt company? unsecured creditors.
Unsecured creditors see this plan, and the entire bankruptcy proceeding, ?s a tool with which to cleanse the assets of liabilities,?among other issues?eaning many people that are owed money by John Laing might not get paid.
Emaar is using the asset sale plan to avoid about $79 million in liability for reimbursement of bonds for land development expenses, unsecured creditors contend.
They?e asking the court to convert the Chapter 11 case to Chapter 7 and start an immediate liquidation of the remainder of the company, which could get more money for creditors.
John Laing? attorneys oppose the idea.
Court hearings on the auction plan and the liquidation proposal were held in Delaware last week. No decisions were announced immediately by the court.
Reorganization Unlikely
An actual reorganization of John Laing looks unlikely, according to court documents from the creditors and the company? own executives.
There ?s not even a hint that a viable homebuilding enterprise will continue,?creditors?lawyers said in court filings this month.
Continued deterioration in the market value of the builder? real estate assets has made a Chap-ter 11 reorganization unlikely and an outright as-set sale a more viable option, Sharp told the court.
Locally, there are a few signs of John Laing being an active builder.
Contractors are said to be completing most of the company? remaining projects. In projects such as its Sendero condominium development at Portola Springs, John Laing has opted not to build model homes to help save money.
It has also bowed out of some projects.
Last week, Irvine Company announced it was kicking off more construction at the Village of Woodbury East, its first new-home neighborhood of the year. The project, called Ivy, will feature mainly entry-level homes.
The 500-home Woodbury East neighborhood, near the Santa Ana (I-5) Freeway, and bordered by Sand Canyon and Trabuco roads in Irvine, originally counted John Laing as one of its main builders.
Now homes at the Ivy project?hose grand opening will be held in July?ill be handled entirely by Newport Beach-based William Lyon Homes Inc.
