American West Development plan confirmation decision due Sept. 27

By Jim Witters

Wilmington, Del., Sept. 25 - A decision on confirmation of American West Development, Inc.'s plan of reorganization is scheduled for Sept. 27, debtors' attorney Brett A. Axelrod said.

The company presented its case during a Sept. 25 hearing in the U.S. Bankruptcy Court for the District of Nevada.

As previously reported, the plan was accepted by a majority of voting creditors.

The proposed plan provides for a consensual restructuring of a term loan owed to the California Bank & Trust as delineated in a pre-petition restructuring lock-up and settlement letter agreement.

Under the lock-up agreement, all money California Bank & Trust advances to the debtor will be converted to 100% ownership of the new equity interests in the reorganized debtor, court documents state.

The plan also provides that the secured lenders will waive their general unsecured deficiency claims if the holders of other general unsecured deficiency claims vote as a class to accept the plan.

The debtor-in-possession financing lender, AWH Ventures, Inc., will provide $10 million to make payments under the plan, provide cash for a construction defect trust and provide working capital for the reorganized debtor, court documents state.

Creditor treatment

Under the proposed plan of reorganization, treatment of creditors would include the following:

• Holders of allowed priority claims will be paid in full in cash on the plan effective date;

• Holders of secured claims - estimated at $177.5 million - will receive payment or performance in full by the reorganized debtor under the new secured loan agreement.

The new secured $49.6 million loan through California Bank & Trust will mature on Dec. 31, 2015. Interest is either a fixed rate base on reserve-adjusted Libor plus the applicable margin for interest periods of one, two, three or six months or a variable rate based on the prime rate plus the applicable margin;

• Holders of general unsecured claims - estimated at $146 million - will receive a share of $1.5 million;

• Construction defect claims - estimated at $80 million - will become the responsibility of the construction defect trust. The trust will be funded with $1.5 million in cash on the plan effective date;

• Bond claims will be paid in the ordinary course of the reorganized debtors business; and

• Old equity interests will be canceled.

American West, a Las Vegas-based homebuilder, filed for bankruptcy on March 1. Its Chapter 11 case number is 12-12349.

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