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Aristotle
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SunCal Temporarily Stalls Lehman in California BK Court
PostPosted: Thu Nov 04, 2010 8:15 pm Reply with quoteBack to top

Various Lehman Brothers entities have been trying to get Santa Ana, CA based Bankruptcy Court Judge Erithe Smith to approve 2 separate Chapter 11 Plans and Disclosure Statements for the 17 or 18 remaining joint venture projects between a Lehman-organized equity investment vehicle and SunCal, which bills itself as California's largest land developer.

The main case is: In re: Palmdale Hills Property, LLC - US BK Ct Central Dist. Cal. Case 8:08-bk-17206-ES

Under those Chapter 11 Plans, Lehman affiliates would receive, in essence, deeds in lieu of foreclosure for the projects and pay 1% of the claims of the project entities unsecured creditors not affiliated with SunCal.

The first hearing on the Disclosure Statements and plans filed by Lehman was supposed to be on 11/5/10. Things were looking grim for SunCal, because SunCal has been unable to file competing Chapter 11 Plans because Lehman maneuvered, in its New York bankruptcy, to make the "automatic stay" effective against any attempt to do a California bankruptcy court auction of those same projects through SunCal proposed Chapter 11 Plans.

As a result, it was quite surprising, on Election Day, when California Bankruptcy Judge Smith's clerk posted an order indefinitely staying (freezing) any attempt by Lehman to get its Chapter 11 Plans for the Lehman/SunCal projects approved, and sending the case to "voluntary mediation" which does not have to occur until February 2011:

"Hearing Continued (RE: related document(s) 1372 Motion for an Order (1) Imposing a Discretionary Stay suspending all matters and proceedings filed or being pursued by the Lehman Entities until all allegedly applicable Lehman Entities automatic stays in the SunCal Debtors Chapter 11 cases are lifted; (2) Extending the limitations period under 11 U.S.C. 546(a); and (3) Confirming that 11 U.S.C. Section 108(c) automatically extends the period of time for the commencement of certain actions, filed by Debtor Palmdale Hills Property, LLC) - GRANT MOTION ON INTERIM BASIS -- MATTER CONTINUED FOR FINAL HEARING TO FEBRUARY 18, 2011 AT 10:00 A.M. at Crtrm 5A, 411 W Fourth St., Santa Ana, CA 92701.; PARTIES ARE ORDERED TO ATTEND MEDIATION PRIOR TO FEBRUARY 11, 2011; PARTIES TO THE MEDIATION SHALL BE VOLUNTARY DEBTORS, TRUSTEE DEBTORS, COMMITTEES FOR VOLUNTARY AND TRUSTEE DEBTORS (INCLUDING CH 11 TRUSTEE); MR. ELIFF; BOND SAFEGUARD INSURANCE/LEXON INSURANCE; ARCH INSURANCE, SUNCAL MGMT; SCC ACQUISITIONS, LEHMAN ENTITIES (INCLUDING LEHMAN ALI AND LV PACIFI,C POINT LEHMAN RE (COLLECTIVELY THE MEDIATING PARTIES); CLAIMS OBJECTIONS MAY PROCEED AGAINST ANY NON-MEDIATING PARTY -- NO CLAIMS OBJECTIONS MAY BE FILED OR PROSECUTED AGAINST ANY OF THE MEDIATING PARTIES PRIOR TO THE FEBRUARY 18, 2011 HEARING; BACK-UP DOCUMENTATION RE CLAIMS ASSERTED BY MEDIATING PARTY SHALL BE PRODUCED AT LEAST 7 DAYS PRIOR TO MEDIATION; NOVEMBER 5, 2010 AT 10:00 A.M. RESERVED AS HEARING DATE RE MEDIATION; ALL HEARINGS RE APPROVAL OF DISCLOSURE STATEMENTS IN VOLUNTARY AND TRUSTEE CASES ARE STAYED PENDING FURTHER ORDER OF COURT; ALL ADVERSARY/CONTESTED ADVERSARY PROCEEDINGS ARE STAYED PENDING FURTHER ORDER OF COURT EXCEPT AS NOTED ON THE RECORD. HEARING RE BOND SAFEGUARD/LEXON SHALL PROCEED AS SCHEDULED ON DECEMBER 17, 2010 AT 10:00AM (Advanced from 12/17/10 at 2:00 p.m.). The case judge is Erithe A. Smith (Duarte, Tina) (Entered: 11/02/2010)"

Things are suddenly looking brighter for beleaguered SunCal.

At the same time, it looks like the people in charge of real estate loan decision making for the various Lehman Brothers entities are being a bit more practical.

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