Home builder WCI goes Chapter 11

By Palm Beach Business.com

BONITA SPRINGS — The downturn in the housing market has claimed a major victim.

WCI Communities Inc., one of the largest home builders in Palm Beach County, has gone Chapter 11 bankruptcy in an attempt to restructure debt and capital.

The filing does not include Watermark real estate brokerage, which does business as Prudential Florida WCI Realty, as well as its WCI Mortgage business and some joint ventures in which WCI is a partner.

“The company, with all diligence, has attempted to avoid a bankruptcy filing,” WCI Chairman Carl C. Icahn said in a statement.
“However, the filing became necessary because of the recent failed effort to obtain financing and the recognition that the company’s entire $1.8 billion of debt may soon be in default.”

Icahn said the need to reorganize became apparent when when  holders of $125 million convertible notes WCI had issued  rejected an exchange offer and instead insisted on being paid in cash in full on Tuesday.

WCI also announced CEO Jerry L. Starkey, who served as WCI’s chief executive officer since 2005, has resigned.

Chief Operating Officer David L. Fry, 48, will act as interim president and chief executive officer.

Before the bankruptcy filing, WCI secured $50 million in order to continue normal business operations. It’s also asked federal bankruptcy court for permission to secure $100 million more in loans.

“While WCI remains cash-flow positive and our asset base is strong, our ongoing operations have been adversely impacted by the continuing downturn in the real estate sector and the overall economy,” Fry said. “Like other large homebuilders across the country, WCI continues to experience declines both in pricing and the sale of new homes and condominiums, as well as dramatic increases in cancellation rates.

WCI Communities has established a toll-free information line for vendors, customers and other interested parties. The number is 800-924-1890. Information is also available at www.wcicommunities.com.