Newport Beach-based William Lyon Homes said on Friday it had made progress on a major restructuring plan that could result in an $85 million cash infusion for hard-pressed homebuilder.

The proposed deal, which likely will result in the company filing for bankruptcy, calls for co-founder and chairman General William Lyon and his family to invest $25 million into the builder in return for a 20% stake in the restructured company plus warrants for another 9%.

The deal also calls for the restructuring of several hundred million dollars of company debt. That would reduce the iconic builder's debt-load by about 37%, cutting annual interest expense on that debt by 45%.

The deal, which has the support of 64% of the builder’s senior note holders, is expected to close by early next year.

The plan is pending approval "through a court-supervised reorganization process," the company said on Friday in regulatory filings.

The builder said it has lined up $50 million in interim financing to run operations during what looks likely to be a pre-packaged bankruptcy plan of reorganization, according to regulatory filings.

The company's "in the process of finalizing the terms of that financing," according to filings with the Securities and Exchange Commission.

No bankruptcy filing had been filed with local courts as of Monday afternoon.

Senior note holders would exchange about $284 million of existing debt for $75 million in secured notes at an interest rate of 12%, according to the reorganization plan.

Santa Monica-based hedge fund Colony Capital LLC, which gave the builder a $206 million loan in 2009, will get a $235 million secured note at 10.25% with a three-year maturity as part of the plan.

In addition to the $25 million investment from the Lyon family, who will keep their positions on the privately-held company’s board and executive team, the builder also plans to raise another $60 million through a sale of common and preferred equity in the company.

William Lyon Homes was taken private in 2006, near the peak of the housing boom. It had struggled to meet interest payments on some of its debt in recent months, raising questions over the company's future.

The new restructuring plan should allow the company to "take advantage of historic market opportunities and position itself for long-term growth," officials said on Friday.