Dunmore Homes to be released from $25.5 million claim under loan guaranty settlement

By Caroline Salls

Pittsburgh, June 25 - Dunmore Homes, Inc. is seeking court approval of a settlement with non-debtor subsidiary Dunmore Laguna Reserve, LLC and KeyBank NA under which Dunmore will be released from a $25.5 million unsecured deficiency claim related to a loan guaranty, according to a Tuesday filing with the U.S. Bankruptcy Court for the Eastern District of California.

According to the motion, Dunmore guarantied loans made by KeyBank to Dunmore Laguna for residential construction projects in Elk Grove, Calif.

Beginning in August 2007, Dunmore said the subsidiary defaulted on the loans, and KeyBank subsequently filed a $25.5 million claim against Dunmore Homes.

On April 30, KeyBank agreed to sell the loans to BHT - Elk Grove KB, LLC. Under that sale agreement, BHT has agreed to release Dunmore Homes from all liabilities related to the loans.

In exchange, Dunmore and Dunmore Laguna will release KeyBank from all loan-related claims they hold against the lender.

A hearing is scheduled for July 15.

Dunmore Homes, a Granite Bay, Calif., homebuilder, filed for bankruptcy on Nov. 8, 2007 in the U.S. Bankruptcy Court for the Southern District of New York. The case was transferred to the U.S. Bankruptcy Court for the Eastern District of California in January. The case number is 08-20569.

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