Court OKs $184M California Coastal Ch. 11 Exit

IRVINE, CA-The US Bankrtupcy Court for the Central District of California has approved a plan that will provide $184 million in refinancing for developer California Coastal Communities to emerge from Chapter 11 bankruptcy. The $184 million will refinance the project debt for the Irvine-based company's Brightwater development.

California Coastal said previously that it had obtained a commitment from an investor for the refinancing, whicgh remains subject to the successful negotiation and execution of definitive loan documents and the court's approval of the company's plan of reorganization in order for it to exit bankruptcy. California Coastal Communities, as GlobeSt.com reported earlier this week, is the parent of home builder Hearthside Homes and Signal Landmark, which owns 110 acres on the Bolsa Chica Mesa. The company says that the new financing will replace its existing secured debt.

California Coastal CEO Raymond J. Pacini commented in that report that the new financing, if approved by the court, “will provide a more certain exit from bankruptcy without the risk of litigation.” Pacini said further that one result of the financing will be that that California Coastal will be able to “sell homes at a pace that allows the company to benefit from the inevitable recovery in coastal home prices.

In connection with the financing commitment, California Coastal will amend its plan of reorganization to provide for the repayment of the existing debt in cash upon the effective date of the plan. California Coastal and some of its direct and indirect wholly owned subsidiaries filed Chapter 11 petitions in October 2009. The Irvine-based company said in its filings and press statements at the time that it sought to extend the maturity on financing for its 356-home Brightwater development overlooking the Bolsa Chica wetlands in Huntington Beach.

Pacini said at the time that the company had been negotiating for some time in an effort to persuade all of its lenders to agree to the extension of the maturity date, but the company was not able to reach agreements with all of the lenders and then chose to file for bankruptcy.