California Coastal Communities, secured lenders resolve plan disputes

By Caroline Salls

Pittsburgh, July 19 - California Coastal Communities, Inc. requested court approval of a settlement agreement with lender agent Wilmington Trust, FSB and its pre-bankruptcy secured lenders that will allow the company to emerge from bankruptcy as soon as possible, according to a Friday filing with the U.S. Bankruptcy Court for the Central District of California.

California Coastal said the settlement would resolve disputes under a new plan of reorganization that would implement the proposed exit financing from Luxor Capital Group, LP and eliminate more than $6.6 million in estate expenses.

The settlement also eliminates further litigation over the company's new plan.

Specifically under the settlement:

• The agent and lenders have agreed to stand down on their objections to California Coastal's latest revised disclosure statement and new amended plan;

• The agent and lenders have agreed to waive more than $6 million in claims for default interest;

• The lenders have agreed to absorb a portion of the agent's and lender parties' professional fees for the period of April through August, resulting in an additional $600,000 in savings; and

• The company has agreed to the allowance and payment in full in cash of full principal and non-default interest portions of the agent and lender parties' loan agreement claims.

The plan is required to take effect by Aug. 31.

As previously reported, Wilmington Trust filed an objection to the company's proposed plan earlier this month.

"As currently drafted, the amended plans do not provide the debtors' largest creditors (whose secured claims, in the aggregate, exceed $181.7 million) with information that is critical to their assessment of whether to support or reject the amended plans - information regarding whether and the extent to which the debtors will attack the principal amounts of the indebtedness owed to the agent and the lenders," Wilmington said in the objection.

California Coastal has requested a July 28 hearing on the settlement.

California Coastal Communities, a residential land development and homebuilding company based in Irvine, Calif., filed for bankruptcy on Oct. 27, 2009. Its Chapter 11 case number is 09-21712.

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