By Mark Waite

William Lyon Homes, the company that built much of Mountain Falls, filed for Chapter 11 bankruptcy just before Christmas, but is now boasting its reorganization plan was approved by the U.S. bankruptcy court in just 53 days.

William Lyon Homes states it expects to emerge from bankruptcy by the end of this month.

Approximately $180 million in principal will be eliminated as part of the recapitalization plan, resulting in a 37 percent reduction in overall debt, the company states. Annual cash interest expense will also be reduced by nearly $25 million, or approximately 45 percent compared with current levels.

The petition for bankruptcy, filed Dec. 19, 2011 in U.S. Bankruptcy Court in Delaware, listed as debtors Mountain Falls Golf Course LLC, Mountain Falls LLC, and a number of other entities including William Lyon Southwest Inc., Presley Homes., Cerro Plata Associates, California Equity Funding Inc., WLH Enterprises, Sycamore CC Inc., PH-LP Ventures, HSP Inc., Whitney Ranch Village 5 LLC, Lyon Waterfront LLC, California Equity Funding Inc. and Duxford Financial Inc.

The administrative agent for William Lyon Homes and lenders committed to vote in favor of a plan of reorganization in a restructuring support agreement dated Nov. 4, 2011, according to the bankruptcy petition. Both parties committed to restructure a term loan.

The largest creditor was U.S. Bank National Association, trustee for a 10 3/4 percent $150.26 million senior note due in 2012; a 7 1/2 percent senior note for $79.9 million due in 2014 and a 7 5/8 percent senior note due in 2012 for $69.3 million.

WLH Enterprises lists the law firm of Irell and Manella LLP as a major creditor with $1 million in professional fees; the firm of Lee, Hernandez, Landrum, Garofalo and Blake for $146,102 in professional fees and two lawsuits, the remainder of the 30 top creditors are out of town construction companies, many of them from out of state.

“The successful and rapid recapitalization of the company is due in large part to the continued loyalty of our customers and suppliers, the professionalism and dedication of our employees and the commitment and support of our creditor groups,” Chief Executive Officer General William Lyon said.

The plan of reorganization, supported by the company’s stakeholder groups, strengthens the company’s liquidity by providing $85 million in new capital investment, he said.

“Since we began this process just a few months ago, William Lyon Homes has successfully recapitalized the company’s financial position, strengthened its business through the acquisition of highly desirable properties in Northern California and South Orange County and built a foundation from which we can grow. In a matter of days, William Lyon Homes will emerge from this process a more competitive company with a strong balance sheet,” Lyon said.

“Today marks the beginning of the next phase in William Lyon Homes’ long history,” Executive Vice-President Matthew R. Zaist said. “We are extremely appreciative of the support of all of our stakeholders and are confident that William Lyon Homes will continue to develop premier communities for many years to come.”

Zaist is also executive vice-president of Mountain Falls Golf Course LLC.

Last year, Nye County refunded $450,917 in impact fees to William Lyon Homes, which claimed it was exempt from paying the fees under a 2002 development agreement. William Lyon Homes had filed suit against Nye County in U.S. district court in May 2011.

William Lyon Homes purchased a substantial interest in the Mountain Falls subdivision from Mountain Falls Acquisition Group in June 2004. In a report to Nye County last summer, William Lyon Homes reported pulling 606 building permits in their development of Mountain Falls, sales have closed on 594 homes.

Most of the construction came during the boom years before the 2008 housing collapse. Last year, William Lyon Homes pulled 12 building permits for single-family homes, about half the total in Nye County for the year. Manager Greg Moynahan pulled six more building permits.

The company has pending projects approved for 1,294 lots on 328 acres. Future plans call for 1,906 lots on 341 acres, for a total of 3,200 lots on 669 acres.

William Lyon Homes is headquartered in Newport Beach, Calif. The company is involved in building single-family homes in California, Arizona and Nevada.