Legend Homes files Chapter 11 bankruptcy to protect operations from margin calls

By Caroline Salls

Pittsburgh, June 11 - Legend Homes and Matrix Development filed for Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the District of Oregon to protect their home building operations from margin calls on land holdings by their lenders, according to a company news release.

Legend said the restructuring will result in a substantial de-leveraging of the companies' finances.

"Because of recent issues related to the national credit crisis, we understand the need of our financial partners to stay viable and also stay within federal mandates. Yet we had to make this necessary move to protect our interests," Legend Homes president Jim Chapman said in the release.

Legend said it expects to emerge from Chapter 11 by the end of the year.

"This is not an effort to avoid responsibility," Chapman said in the release.

"It is, in fact, intended to resolve issues from current market and industry challenges, meet our obligations, and protect our buyers who are still under warranty or in the contract stage."

According to court documents, the company has $100 million to $500 million in both assets and debt.

Legend/Matrix's largest unsecured creditors include:

• M&T Mortgage Corp., Lake Oswego, Ore., with a $14.87 million bank loans and guaranty of affiliate debt claim;

• Keybank NA, Portland, Ore., with a $9.44 million bank loan and guaranty of affiliate debt claim;

• Fountaincourt HOA & COA, Portland, Ore., with a $7.11 million breach of contract lawsuit claim;

• Bank of America NA, Portland, Ore., with a $6.41 million bank loan, letter of credit and guaranty of former affiliate debt claim;

• Columbia River Bank, Lake Oswego, Ore., with a $5.03 million bank loans claim;

• First Independent Bank, Vancouver, Wash., with a $3.73 million bank loans and letter-of-credit claim;

• Wells Fargo Bank, San Francisco, with a $1.21 million bank loan claim; and

• Key Equipment, Albany, N.Y., with a $1.15 million guaranty of affiliate debt claim.

Legend Homes and Matrix Development are Portland, Ore., developers, designers and builders of homes and condominiums. Their Chapter 11 case number is 08-32798.

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