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Aristotle
Nitroglycerin


Joined: 05 Dec 2007
Posts: 594
Location: On a sand dune, sipping a cold soda

Woodside Consents to 185 Entities Being Chapter 11 Debtors
PostPosted: Thu Aug 28, 2008 12:41 am Reply with quoteBack to top

The ultimate owner of all 300 entities comprising Woodside Homes is Woodside Group LLC. The same creditors who filed the involuntary bankruptcy petitions against the 15 entities named Woodside Homes also filed an involuntary bankruptcy petition against Woodside Group LLC, i.e. Central District of California, Riverside Branch, Bankruptcy Court Case No 6:08-bk-20682-PC. Those creditors also filed involuntary bankruptcy petitions in Riverside Bankruptcy Court against a total of 184 Woodside Group, LLC related entities!

Today, 8/27/08 Bankruptcy Judge Carroll signed an order in Case No 6:08-bk-20682-PC which is to be effective in all 185 involuntary bankruptcy cases. That order confirms the binding nature of a stipulation between Woodside Group LLC and its subsidiaries, the 5 insurance companies who filed the involuntary bankruptcy petitions and JP Morgan Chase as agent for the lenders on the senior unsecured notes. That Stipulation, which is Document 17 on the Docket for Case No 6:08-bk-20682-PC, says:

(1) None of the Woodside entities intends to contest the creditors allegations in the Involuntary Petitions that the 185 entities, including Woodside Group, LLC, Woodside Homes and Pleasant Hill Investments (Woodside's financing arm) are insolvent;

(2) All 1855entities will file consents with the Bankruptcy Court by September 16, 2008, indicating that they consent to be Chapter 11 Debtors. The "Relief Date" upon which the 185 Woodside entities will become Chapter 11 Debtors will be September 16, 2008. The Bankruptcy Court will issue orders finding that the allegations of insolvency in the Involuntary Petitions are proven by that admission by the debtors.

(3) From today's date, August 27, 2008, all 183 Woodside entities will operate as if they are Chapter 11 Debtors, e.g. not entering into transactions outside of the ordinary course of business, opening and using new debtor in possession bank accounts at JP Morgan Chase, and doing their accounting under the Bankruptcy Court's accounting rules. They will be able to pay trade creditors in the ordinary course of business through 9/16/08.

(4) From today's date, the 185 Woodside entities will be authorized to pay their employees an aggregate of $4.9 Million in payroll for work through 9/20/08, however the three top officers of Woodside may not be paid.

(5) Between now and 9/16/08 Woodside will be authorized to continue to sell homes, and close escrows, in the ordinary course of business, and indemnify title insurance companies in that regard.

(6) The parties will not contest each other's hiring of lawyers for the bankruptcy cases, and Woodside will pay all of the attorneys fees and costs for the 5 creditors who filed the involuntary bankruptcies and for JP Morgan Chase.

(7) The parties reserved the right to contest all other issues, as if the 185 Woodside debtors had filed bankruptcies in the normal way.

As to what all the loan proceeds described in the involuntary petitions (alleged by creditors to be $312 Million outstanding) and the JP Morgan Chase joinder (alleged by JP Morgan to be $372 Million) were used for, in its previous Chapter 11 bankruptcy filing for Woodside AMR 207, Inc. and Woodside Portofino in March 2008, those debtors filed declarations stating that all of the money was funneled to one of the Woodside Group, LLC's subsidiaries, Pleasant Hill, LLC and stating that Pleasant Hill, LLC distributed the money to the 328 Woodside entities to pay construction costs and operating costs. All of those loans were unsecured, according to the March 2008 debtors' filings. That filing also stated that those loans were guaranteed by each of the 330 Woodside related entities. Documents filed by the debtors in the March 2008 bankruptcies also indicate that the goal of Woodside Homes is to do a global work-out of its unsecured debt. Obviously, given the 183 involuntary bankruptcy petitions filed and the 183 Woodside entities signing the stipulation that they consent to be in Chapter 11, those workouts of unsecured debt will occur in the context of Chapter 11 bankruptcy. The two March 2008 bankruptcy cases are Case No. 08-13394-PC and 09-13396-PC, U.S. Bankruptcy Court, Central District of California, Riverside Branch.

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Aristotle

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Aristotle
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Joined: 05 Dec 2007
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Location: On a sand dune, sipping a cold soda

It's Not a "Friendly" Involuntary Chapter 11 Case
PostPosted: Fri Aug 29, 2008 8:31 pm Reply with quoteBack to top

The print press in communities with substantial connections to Woodside Homes many operations are starting to report on the involuntary bankruptcy cases. A few of those newspapers have simply reported Woodside Homes' public relations spin, i.e. that they will voluntarily file Chapter 11 on 9/16/08. Three newspapers have done a fairly good job of reporting, the Salt Lake Tribune, The Arizona Republic and the Riverside Press Enterprise. Each of those newspapers' stories disclosed that the Woodside entities were involuntarily dragged into bankruptcy. Two of the stories have unearthed background information which gives hints at why the creditors took the unprecedented step of filing involuntary bankruptcy petitions against 185 entities.

From 8/29/08 Salt Lake Tribune article on Woodside Homes:

"Woodside's agreement not to contest the bankruptcy followed an Aug. 21 motion by the noteholders to limit Woodside's business activities while U.S. Bankruptcy Judge Peter Carroll considered their involuntary bankruptcy request.

Woodside reorganized its corporate structure and triggered tax losses that benefited Woodside's equity holders, mainly Ezra Nilson and his family, without informing creditors during debt restructuring talks, the noteholders said in their filing.

The noteholders formed the view that a restructuring with the current equity holders and the current senior management team is not possible," according to the filing."

From the 8/28/08 Arizona Republic Story:

"Don Gaffney, a Phoenix attorney representing JP Morgan Chase, said Woodside and its many affiliates owe his client $335 million in unpaid debt. The builder owes another $370 million in bond and note debt to a list of investors that reads like a who's who of life insurance companies.

Creditors include Metropolitan Life Insurance Co., John Hancock Life Insurance Co., New York Life Insurance Co., and two others.

Gaffney said there also might be other debt owed to various contractors.

In addition to the scores of Woodside entities named in the bankruptcy proceedings, Gaffney said there are several more not yet included because attorneys still are trying to connect them to the parent company's debt.

"Woodside homes has a very large and complicated organizational chart," he said. "There are well over 200 entities, all indebted to these creditors."

Obviously, homebuilders and their owners negotiating with honesty, good faith and full disclosure, and not engaging in manipulations hidden from major creditors is more likely to produce a favorable work out and continued funding relationship. These major lenders concerted attack on the management of Woodside Homes provides a cautionary tale for public and private homebuilders playing in the mega million dollar big leagues.

Unlike other mega million dollar work outs, in and out of Chapter 11, in which major homebuilders have participated this year, apparently there is no debtor in possession financing in the offing, to be provided by the creditors who filed the involuntary proceedings. The Salt Lake Tribune also reported:

"Woodside continues to build and sell homes and pay employees and subcontractors, said Jennifer Mercer, a crisis management professional hired by the company to serve as its spokeswoman.

She said Woodside doesn't believe it will need a loan to fund operations during Chapter 11.

"The company has ample cash on hand to continue their operations," Mercer said."

Time will tell if that claim is true.

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Aristotle

As Yogi Berra said "It's like deja vu all over again."
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Aristotle
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Joined: 05 Dec 2007
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Location: On a sand dune, sipping a cold soda

More Detail Coming In
PostPosted: Sat Aug 30, 2008 2:11 am Reply with quoteBack to top

From the East Valley Tribune, in Arizona, covering Gilbert, Mesa, Tempe and other smaller cities, a story dated 8/9/08:

"Five insurance companies and 14 bank creditors asked the court to compel Woodside into bankruptcy, so they could collect on what they say is more than $700 million they're owed. Woodside later consented to file Chapter 11 by Sept. 16.

The effort, spearheaded by JP Morgan Chase, aimed for a better restructuring effort from Woodside and more transparency in its organization, said Donald Gaffney, an attorney working on Chase's behalf.

"This puts the company under the supervision of the courts," he said. "The short-term goal is to get transparency. The long-term goal is to get repaid."

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Aristotle

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InquiringMind
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Joined: 30 Aug 2008
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Re: Woodside
PostPosted: Sat Aug 30, 2008 4:23 am Reply with quoteBack to top

Ahh ...I have many questions that hopefully will be answered if the short term goal is transparency. This should be enlightening.
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