A company that builds under the brand of John Laing Homes - a US subsidiary of Emaar Properties - has filed for Chapter 11 bankrupcy protection, claiming between $500 million and $1 billion in debts.
WL Homes, which operates 105 real estate developments in Colorado, California, Arizona and Texas, has up to 50,000 creditors, according to its bankruptcy filings.
John Laing Homes was sold to the Emaar Properties for $1.05 billion in 2006 and according to an affadavit included in the bankrupcy file, the Dubai real estate giant invested an additional $613 million in the company, but eventually shut off funding.
At the time of the sale, during the peak of the US real estate boom, John Laing built about 3,000 homes annually, primarily in California, and owned or controlled 15,000 undeveloped lots, according to a report in the Los Angeles Times.
The company used to have a work force of 1,100 but trimmed employees to about 90 by the first week of this month, Bradley Sharp, the company’s chief restructuring officer said in the affadavit.
A statement from John Laing Homes confirmed that it, along with a number of its affiliates, had elected to file Chapter 11 petitions in the US Court for the District of Delaware.
"John Laing Homes anticipates that the Chapter 11 process will allow it to significantly reduce debt from its balance sheet while facilitating a strategic reorganisation of the company, which will place it in the strongest possible position to sustain its momentum despite extremely challenging market conditions," it added.
The company added that it plans to use a debtor-in-possession line of credit to maintain operations.
The company filed several motions to allow it to pay employees, hire bankruptcy lawyers and retain restructuring specialists.
California-based WL Homes was formed in 1998 when John Laing merged with Watt Homes, according to court documents.
In 2006, the company was sold to Emaar Properties, the largest developer in the Middle East, which is building the world’s tallest tower, the Burj Dubai.
Emaar's operating profit slid from $1.79bn in 2007 to $1.52bn last year as revenues declined 10.4 percent.
It blamed a $687m write-down last year on its US subsidiary, which has suffered at the hands of the battered US housing market.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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