The Housing Chronicles Blog: Builder WCI files for bankrtupcy

Monday, August 4, 2008

Builder WCI files for bankrtupcy

Although the homebuilder WCI Communities doesn't build in California (they're more heavily concentrated in the northeast, mid-Atlantic and the southeast, including Florida), the bankruptcy by one of the country's largest public builders puts a public face on a largely hidden issue -- builders on the ropes in wait of a rebound. From an AP story via the LA Times:

Carl Icahn's WCI Communities became the latest casualty of the housing market crisis Monday, filing for Chapter 11 bankruptcy protection after the home builder failed to get additional financing in the face of massive losses.

Icahn, chairman of WCI's board, said the filing was necessary because the Bonita Springs, Fla.-based developer's entire $1.8 billion debt may soon be in default. Icahn said this was confirmed when some holders of $125 million convertible notes insisted on being paid in cash in full on Tuesday.

WCI also fired Chief Executive Jerry L. Starkey and replaced him on an interim basis with David L. Fry...

WCI Communities builds tower residences and traditional homes in upscale communities in the mid-Atlantic and Northeast, but most of its business is in Florida, where the housing market has struggled mightily. The developer had been trying to stay afloat in the face of weak demand, flagging prices, canceled orders and growing inventory.

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