KB Home offers millions to settle creditor claims

Homebuilders in the 1,950-acre Inspirada development in Henderson on Thursday said they had reached a preliminary settlement to pay creditors $250 million or more to end an involuntary bankruptcy case.

KB Home said it agreed to pay $214 million to $225 million to settle creditor claims for its portion of liabilities stemming from Inspirada, which is also known as South Edge. In return, KB would get 65 percent to 68 percent of the land and become a partner in a new entity established through a bankruptcy reorganization plan.

"We are pleased that a preliminary agreement has been reached in this matter, and we remain committed to building beautiful, affordable and energy-efficient new homes for families throughout the Las Vegas area, as we have for the past 17 years," Craig LeMessurier, KB Home's corporate communications director, said in a statement.

Beazer Homes reported it would pay $15.7 million to $17 million, while Toll Bros. said it would pay an undisclosed amount. Others agreeing to settle for undisclosed sums include Pardee Homes, Coleman-Toll Limited Partnership and Weyerhaeuser Real Estate Co. However, Meritage Homes and John Ritter's Focus South Group didn't join in the settlement.

The settlement was offered to JPMorgan Chase and 38 other lenders, including Wells Fargo & Co. and Credit Agricole. JPMorgan led the group that lent $585 million for the project. A spokesman had no immediate comment.

The debt went to arbitration when the borrowers stopped paying, and JPMorgan and others later petitioned to have South Edge put into involuntary bankruptcy.

When the debtors objected to bankruptcy, Judge Bruce Markell ruled that they lacked standing because a court-appointed trustee, Cynthia Nelson, represented Inspirada. The debtors appealed to federal court and lost. The debtors appealed again to the 9th Circuit Court of Appeals, which put the issue in mediation.

The settlement offers were disclosed in reports filed with the Securities and Exchange Commission on Thursday.

Approved in 2005, Inspirada was initially planned as a village of nearly 29,000 residents in 11,500 homes south of the Henderson Executive Airport.

Only about 700 attached and single-family homes have been built in Inspirada, according to an estimate last month by Home Builders Research. KB Home said it has built 600 homes in Inspirada since the opening in 2007.

City Councilwoman Debra March, whose ward encompasses Inspirada, said she hopes the proposed settlement leads to more homebuilding and sales in the area.

"This is very promising and movement in the right direction," said March, retired director of the Lied Institute for Real Estate Studies at the University of Nevada, Las Vegas.

Dennis Smith, president of Home Builders Research, agreed with March.

"Any kind of settlement or moving forward would be an obvious improvement over getting dragged through the courts and letting the attorneys be the only ones who profit," Smith said.

Contact reporter John G. Edwards at
jedwards@reviewjournal.com or 702-383-0420.