California Coastal plan hearing Feb. 16, expects to emerge in February

By Caroline Salls

Pittsburgh, Jan. 12 - California Coastal Communities, Inc. said the U.S. Bankruptcy Court for the Central District of California has scheduled its plan of reorganization confirmation hearing for Feb. 16.

According to a news release, California Coastal will now begin soliciting votes on the plan from its creditors.

The company said the plan is supported by more than 80% of its senior secured lenders. As a result, California Coastal expects to obtain confirmation of the plan at the Feb. 16 hearing and emerge from bankruptcy shortly thereafter.

"With the support of our lenders, we are on track to exit bankruptcy by the end of February," chief executive officer Raymond J. Pacini said in the release.

"We look forward to the spring selling season and are well positioned to provide unique coastal homes at our Brightwater project in Huntington Beach."

As previously reported, the company negotiated a plan support agreement with the lenders that will enable it to proceed with the plan, which includes a deleveraging of California Coastal by converting $56 million of the senior term loan into equity.

Under the plan:

• Holders of revolver claims will receive new second-lien loans;

• Holders of term loan claims will receive a share of $44 million in new third-lien loans and 100% of the company's common stock;

• Holders of other secured claims will receive either the proceeds from the sale of the collateral securing their claims or the collateral, or have their claims reinstated;

• Holders of other priority claims and convenience claims will be paid in full in cash;

• Employee PTO claims will be reinstated;

• Holders of general unsecured claims will receive interests in a general unsecured creditor trust, which will be funded with $2 million to $3 million in company contributions if these creditors vote to accept the plan;

• Holders of interests in reorganizing subsidiary debtors will be reinstated; and

• Holders of intercompany claims and California Coastal interests will receive no distribution.

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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