(Adds prepackaged plan in third paragraph.)
Dec. 19 (Bloomberg) -- William Lyon Homes, the builder that borrowed $206 million from Thomas Barrack’s Colony Financial Inc., filed for bankruptcy after agreeing on a reorganization plan with creditors.
The Newport Beach, California-based company listed liabilities of between $500 million and $1 billion in Chapter 11 documents filed in U.S. Bankruptcy Court in Wilmington, Delaware today.
Luxor Capital Group LP, a New York-based hedge fund, is poised to gain control of the builder under the prepackaged bankruptcy, according to a Nov. 17 filing with the U.S. Securities and Exchange Commission.
The Lyon family, which took the homebuilder private in 2006, will reduce its stake to 20 percent from 94.6 percent, William Lyon said. Colony Financial and investors holding a majority of its $283 million of unsecured bonds agreed to the plan, the builder said in the SEC filing.
The plan will cut William Lyon’s debt to $327.8 million from $509.8 million, according to the proposal for bankruptcy. The Lyons agreed to invest an additional $25 million into the company and will receive warrants that may increase their ownership stake.
The case is William Lyon Homes, 11-14020, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--With assistance from Zeke Faux and Jonathan Keehner in New York. Editors: Douglas Wong, Suresh Seshadri.
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