Bankruptcies Pouring In Now!!!!
LandSource bankruptcy filing expected in May as cash runs out
New York, April 29 (LCD) – LandSource Communities Development is expected to file for bankruptcy within two to three weeks, lenders said today following a private call. A filing would push the default rate in the S&P/LSTA Leveraged Loan Index to 1.25% by principal amount, and to 1.91% by number of issuers.
A depletion of cash will likely prompt the filing next month. The company’s cash pile has dwindled to roughly $25 million, from about $115 million in early February.
Empire Land, an Ontario, Calif.-based land development company, filed for bankruptcy protection on April 25 in the Riverside Divisional Office of U.S. Bankruptcy Court in the Central District of California.
"A severe tightening or loss of financing for the entitling and development of land and the resulting pressures that were placed on the debtors' cash flows" resulted in the action, according to a statement made by CFO Neil Miller in court documents.
A number of public homebuilders are involved in off balance sheet joint venture land development deals. If the debt was structured on a recourse basis, than the HB would be liable for any default, even if liability is limited to a "bad boy" provision where a joint party files for BK.
We heard about a couple of Vegas defaults a few weeks ago. The LandSource deal mentioned above is probably one of the most visible CA deals of the past year as it involved a few billion dollars between debt and Calpers equity investment. Expect to hear about a lot more defaults in upcoming weeks. The loans on these transactions were syndicated to hundreds, if not thousands of banks. The fall out from this will be a mess......expect to hear about some public home builder issues in upcoming days and bank problems in upcoming weeks.
Concentric Contraction is just beginning.