In a letter to the public, dated June 8, 2008, Newhall Land issued a statement regarding the decision LandSource Communities Development LLC made “today” to voluntarily file for Chapter 11 of the bankruptcy code, in order to restructure their debt.
Newhall Land maintains that they will survive this downturn, and is confident that they will be strong as ever once a better real estate market returns. How did Newhall Land get in such a precarious position? Per their email tonight…”We – just as virtually everyone throughout the nation – have been affected by changes in the housing market and the resulting decline of land and home values.”
Take a look at the contents of the letter below:
“Dear Friends, As you may have heard, LandSource and certain of its subsidiaries today voluntarily filed to restructure their debt under chapter 11 of the Bankruptcy Code.
Newhall Land is included in the filing. Because of our relationship with you and the members of the community, we wanted to let you know what this means – and does not mean – for Newhall Land. First and foremost, it does not mean that we are going out of business. Chapter 11 provides a legal means for companies to reorganize their debts so they can continue in business. And that’s exactly what we intend to do.Newhall Land has weathered fluctuations and retrenchments in both the California and national real estate markets before. We have every intention not only to survive the current real estate downturn, but to flourish once the market stabilizes. LandSource has received commitments for debtor in possession financing from Barclay’s Bank, including a $135 million revolving line of credit. This post-petition financing assures that there will be no interruption in day-to-day operations. You may be asking yourselves how we came to this difficult juncture. The answer is relatively simple. We – just as virtually everyone throughout the nation – have been affected by changes in the housing market and the resulting decline of land and home values. When the company was unable to meet the debt covenant obligations under its credit facilities, the decision was made to file chapter 11, enabling the company to access additional working capital and modify its debt while continuing to operate its ordinary course of business.
We believe chapter 11 provides the best, most effective means for LandSource and its subsidiaries to preserve the value of their business, meet postpetition obligations, and maintain constituents’ confidence while it works with creditors to achieve a long-term restructuring. Our ability to succeed is dependent upon your confidence in us, and we took this step, in part, as a means to safeguard that trust. We will make every effort to keep you fully informed of developments relating to our progress.
If you have particular issues you would like to discuss, please feel free to call us at (661) 255-4000.”
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