It’s easy to tell it’s not yet business as usual at John Laing Homes, despite bankruptcy protection for the embattled Irvine homebuilder.
Home sales remain on hold across the company. Detailed plans for sales of land and partially finished lots the company owns still are being worked out.
And the company is fighting with its landlord about unpaid rent for its new headquarters on Jamboree Road, according to court documents.
John Laing filed for Chapter 11 bankruptcy protection last month, after being cut off from funding by its parent company, Dubai-based Emaar Properties PJSC, as well as lenders.
The company counts more than $1 billion in assets and debt of at least $500 million to $1 billion, the company said in its initial petition, made in Delaware’s bankruptcy court.
Since the filing, John Laing has worked to arrange temporary financing, get out of leases at local offices and pay its remaining staff, among other issues.
What it hasn’t done is sell any homes.
The company recently filed an operating budget for the month of March. The filing shows the company doesn’t expect to record any home sales from the time of its bankruptcy filing through March.
In the weeks prior to the filing, reports told of John Laing returning deposits to buyers who had signed contracts. The builder stopped home construction in January.
The company doesn’t appear to be actively marketing any projects. As of last week, neither the Web sites for John Laing nor its luxury division were operating.
Company officials could not be reached for comment.
What specific developments John Laing holds on to after it reorganizes remains to be seen. At the time of the filing, the company said it planned to shed more than half of its 105 projects, and it would be focusing on its home base of Southern California.
A court hearing on the bidding procedures for the land and asset sales is scheduled for this week.
Creditors said in court filings that not enough detail has been given to this process so far, even though property auctions could conceivably begin in a matter of weeks.
Specific properties targeted for sale haven’t been identified, yet a planned auction could be conducted within 20 days after announcing a date for the sales, said lawyers for Guaranty Bank, a creditor owed nearly $8.9 million by John Laing, in one filing.
The recently filed operating budget also shows the company now is paying more for legal and other bankruptcy-related professional fees than it is paying its remaining staff,said to be about 70 people.
The builder budgeted about $475,000 for a week of legal fees, outpacing its two-week payroll of $430,000.
Another $475,000 in legal fees should be due by March 30.
Legal Fees
Much more in legal fees should be paid during the upcoming months. Expect to see legal bills top $10 million, according to a formula used by Lynn LoPucki, a bankruptcy law professor at the University of California, Los Angeles, who tracks court costs.
Not too many Orange County law firms will be getting in on the action. John Laing is using lawyers from the Delaware office Pachulski Stang Ziehl & Jones LLP as its lead attorneys.
Rent being paid at the builder’s 65,000-square-foot headquarters in Irvine’s Impac Center continues to be an issue for the company, as well as its landlord.
At the time of the company’s filing, John Laing said it was given a notice saying it had five days to pay its rent for the building or leave. It’s still at the building, but it’s said to be behind on its rent.
On March 11, landlord Scholle Jamboree Property Development LLC of Irvine said the builder hadn’t paid its rent of $214,500 for March. To date, John Laing hasn’t as-sumed or rejected the lease at 19520 Jam-boree Road, the landlord said in a court filing.
