Summary of Motion to Continue Sale of Homes
At the omnibus hearing on, the Debtors sought final approval to continue to sell homes in the "ordinary course of business."
The Committee objected to the relief requested, but recognized the Debtors' need to move forward on the sales of homes that are completed and ready to close as a means of reducing the secured debt on the Debtors' projects and providing some liquidity for the completion of additional homes. With regard to ten (10) identified homes currently ready to close, the Debtors, the Committee and the various project lenders have had negotiated a form of order that will address the parties' concerns and facilitate those closings.
The Debtors' general request for authority to sell homes in the ordinary course was subject to multiple objections from various parties including the Committee. The Committee's objection was based on the fact that it was not in a position to consent to the Debtors being given unfettered advance approval to sell homes. At the time of the motion, the Committee had not been provided with a completion analysis with regard to the Debtors' projects, nor had the Committee had the opportunity to prepare such an analysis on its own. That analysis is needed to determine, in the first instance, the economic viability of the Debtors' projects and will dictate whether the estates' best interests are served by completing and closing additional homes, as opposed to selling some or all of the Debtors' projects, "as is," to other developers.
Moreover, the Committee had no visibility as to the appropriate pricing for homes in the various geographic areas in which the Debtors' projects are located. In short, the Debtors' request to sell homes in the "ordinary course" was, in the opinion of the Committee and its professionals, premature.
However, the Committee did propose that it confer with the Debtors and the project lenders and devise a procedure that will include: (a) reasonable advance notice to the Committee and relevant project lenders of proposed closings, with an opportunity to object and be heard on short notice if any objection cannot be resolved; (b) a mechanism for the payment of proceeds to secured creditors, subject to the Committee's right to investigate and challenge liens; and (c) the ability to close on sales and maintain proceeds in escrow in the event there is a dispute regarding the entitlement of an alleged secured creditor (including an alleged construction lien claimant) to sale proceeds.
The continued hearing on the Debtors' motion to continue the sale of homes is scheduled for 11/13/06 at 1:00 pm.
The Committee objected to the relief requested, but recognized the Debtors' need to move forward on the sales of homes that are completed and ready to close as a means of reducing the secured debt on the Debtors' projects and providing some liquidity for the completion of additional homes. With regard to ten (10) identified homes currently ready to close, the Debtors, the Committee and the various project lenders have had negotiated a form of order that will address the parties' concerns and facilitate those closings.
The Debtors' general request for authority to sell homes in the ordinary course was subject to multiple objections from various parties including the Committee. The Committee's objection was based on the fact that it was not in a position to consent to the Debtors being given unfettered advance approval to sell homes. At the time of the motion, the Committee had not been provided with a completion analysis with regard to the Debtors' projects, nor had the Committee had the opportunity to prepare such an analysis on its own. That analysis is needed to determine, in the first instance, the economic viability of the Debtors' projects and will dictate whether the estates' best interests are served by completing and closing additional homes, as opposed to selling some or all of the Debtors' projects, "as is," to other developers.
Moreover, the Committee had no visibility as to the appropriate pricing for homes in the various geographic areas in which the Debtors' projects are located. In short, the Debtors' request to sell homes in the "ordinary course" was, in the opinion of the Committee and its professionals, premature.
However, the Committee did propose that it confer with the Debtors and the project lenders and devise a procedure that will include: (a) reasonable advance notice to the Committee and relevant project lenders of proposed closings, with an opportunity to object and be heard on short notice if any objection cannot be resolved; (b) a mechanism for the payment of proceeds to secured creditors, subject to the Committee's right to investigate and challenge liens; and (c) the ability to close on sales and maintain proceeds in escrow in the event there is a dispute regarding the entitlement of an alleged secured creditor (including an alleged construction lien claimant) to sale proceeds.
The continued hearing on the Debtors' motion to continue the sale of homes is scheduled for 11/13/06 at 1:00 pm.
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