(Updates with excerpt from ruling in third paragraph.)
Oct. 28 (Bloomberg) -- Builders KB Home, Beazer Homes USA Inc. and Toll Brothers Inc. won court permission for their 2,000-acre, Las Vegas-area development to exit bankruptcy.
The group will maintain control of the project, a new community in the Las Vegas suburb of Henderson, Nevada, called Inspirada. The reorganization plan for the project is based on a settlement among the builders, including minority partner Pardee Homes of Nevada, and lenders represented by JPMorgan Chase Bank over a $585 million loan, which will not be fully repaid.
“Absent the settlement and distribution schemes set forth in the plan, holders of unsecured claims would receive no distributions whatsoever,” U.S. Bankruptcy Judge Bruce A. Markell in Las Vegas wrote in his order approving the reorganization plan yesterday, citing “economic realities.”
Lenders forced the development into bankruptcy last year in a dispute with the builders. In February, Cynthia Nelson, a senior managing director of FTI Consulting, Inc., was appointed as a trustee to oversee the bankruptcy case. In May, the builders settled their dispute with the lenders.
Under the settlement, lenders will be paid $330 million to $340 million of the $367 million they are owed, according to court records. The bankruptcy leaves the lenders with an unpaid claim of about $47 million, the judge said in his order.
The development began in 2003 with plans to build 8,500 homes spread across seven villages along with a 300-acre town center of shopping, office and casino space that included an additional 3,000 residential units. The project started with a budget of $1.25 billion that eventually grew to $1.55 billion because of cost overruns, according to court papers.
The case is in re South Edge LLC, 10-32968, U.S. Bankruptcy Court, District of Nevada (Las Vegas).
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