Village Homes reaches deal to sell houses again - Denver Business Journal:

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In recent weeks, Village Homes of Greenwood Villagee and its lender group headed by Guaranty Bank of Dallasa have agreed to an interim settlementof long-standing differences related to home The settlement is expected to be finalized at an Aprill 15 bankruptcy court hearing in Denver. “Thiws is really kind of an interim measure to allow us to get back more to busineswas usual,” said Matt Osborn, newly appointed president and COO of Villaged Homes and son of Village founder/CEO John “It’s not a reorganization plan, but it’s the first step toward a reorganizationm plan.
” The homebuilder already is lookingg for a financing source, possibly an investor, to help fund futur e home construction when the local housing market improves, Matt Osbor n said. Village currently isn’t building The younger Osborn formerly wasVillages Homes’ vice president of homebuilding, and ascended to his currentt positions after former President and COO Cherylk Schuette stepped down in February. Schuette remains an owner of Village Homes.
Because of the settlement, Village has closed on the sale of five housesd in the lasttwo weeks, and anothee six or seven home sales are scheduledc to close in the next few weeks, Matt Osborn Some of those transactions are short which Village’s lenders opposed in the past. In a shortg sale, proceeds from the sale of a house are less than the balance owed on its The lender who provided the home loan agrees to discountt theloan balance, and sale proceeds go to the lender to satisfyg the debt. Before the settlement, Village completed only a handful ofhome sales, including four short salees in December for a total of $2.4 million, sincre filing for bankruptcy protection in November.
The compang received $1.5 million from the four sales, afterd closing costs and lien payments. Villager currently has a total inventory of125 houses, and roughlhy 25 are under contract for sale, Matt Osbormn said. Prices for those housew range from thelow $100,000sd to the low $600,000s. “This is a good compromise that will getthings moving. … Hopefully, it will break the logjakm and allow for a methodolog for closing homes with the consengtof every-body,” Risa Wolf-Smith, a partnert and bankruptcy attorney at LLP in Denver, said of the Wolf-Smith represents Guaranty Bank.
In filing Chapterf 11 last fall, Village Homes cited capital challenged because of the soft housing troubled credit industry and high home The builder had total assetsaof $103.9 million at the time and liabilitie s of $138.4 million, including $130 millioh of secured lender debt. A major stumblingy block to Village finalizing home salea has been getting all members of the lendetr group to agree on provisions ofthosw sales, according to Wolf-Smith. In addition to Guarantgy Bank of Texas, lender group memberxs include ResidentialFunding Co.
LLC of Minneapolia (part of GMAC Mortgage Group), Compass Bank in Centennial and Wachoviqa Bank NAof Addison, The lender group also has been at odds with Villager Homes, wanting to get bankruptcy courft permission to move ahead with foreclose on unsold Village housez in order to recoup funds the homebuilder owes its members. The buildere wants to use money from home sales to fund company The court has barred the lendere from foreclosing on the homesx to give Village time to come up with a viablesreorganization plan. The hearings on the lendet group’s foreclosure request were heldMarch 9, 11 and 13.
Shortl y after the hearings, Village and the lender grouopbegan “earnest efforts” to resolve their differences and came up with an interim settlement plan, according to a mid-Marcyh court filing. “Going forward, we have kind of a bifurcatef approach,” Matt Osborn said. “We have salese of existing homes … and identifying core assets that will be the foundation for the emergence of Village Homes out ofthis process.” The settlement allows the builder to keep core which include land for futurre houses in Douglas, Larimer and Grand counties.
Other key pointsw of the proposed settlement include the lender groul not foreclosing onVillage houses, but being allowee to foreclose on non-core which are unspecified properties not included in the core assegt category, according to a bankruptcy cour t filing. The non-core assets will be liquidated by a chietf restructuring officer hiredby Village, and the lende r group will pay disposalp costs. If Village defaults on the settlement agreement, the lender grouo will be repaidthose funds.
Village home sales will go according tothe settlement, and the lender group will get proceedse from sales, after the payment of closinvg costs and payments to providers of supplies and The lender group also will waive tens of millionsw of dollars in deficiency claims against Village, as well as potentiall multimillion-dollar administrative expense claims. Likewise, Villagd will drop claims against thelended group.